Legislation Overview (June 2018)

Taxes

VAT

The State Fiscal Service of Ukraine in its Individual Tax Advice “On certain Issues of Drawing up a Tax Invoice” of 01.06.18, No. 2403/6/99-99-15-03-02-15/ІПК explained: the presence or absence of zeroes in the tax invoice before Individual tax number (hereinafter - ITN) does not affect its registration in URTI. The system allows for registration only those tax invoices in which the taxpayer’s ITN has been entered in the register of VAT payers.

A signal for a successful registration of a document for VAT payers will be a relevant receipt.

If the supplier receives a receipt for the rejection of the tax invoice registration in the URTI, he/she should make and register a new tax invoice in the URTI.

It should be recalled that a registered tax invoice is the basis for the reflection of a tax credit for a buyer.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Procedure of VAT Taxation and the Income Tax Transactions with the Receipt of Funds by the Company in the Form of Security (Guarantee) Payment” of 01.06.18, No. 2412/6/99-99-15-03-02-15/ІПК explained the tax consequences in a situation where the distributor receives a guarantee payment from the dealer as a pledge to fulfill the terms of the agreement.

Thus, if the distributor receives such a payment only to ensure that the dealer fulfills his/her obligations, after which the money will be returned to him/her, there will be no VAT obligations on the distributor.

However, if after some time this guarantee payment is credited as payment for goods/services, on this date the distributor will deduct tax liabilities with VAT. A dealer, in turn, forms a tax credit provided that the tax invoice is registered in the URTI.

As for the tax-profit consequences, then the distributor focuses exclusively on accounting. After all, the TCU does not contain any corrective differences regarding the receipt of guaranty payments.

The State Fiscal Service of Ukraine in its letter “On the peculiarities of compilation of the adjustments calculations to the tax invoices issued to buyers – VAT payers” of 22.06.18, No. 18983/7/99-99-15-03-02-17 summarized in one letter all the rules for filling the adjustment calculation to the tax invoice (hereinafter – TI). Now, accountants will not have to fill the TI at random and collect the receipts that the registration of such a document in the URTI has been rejected. Almost four months have passed since the system setup for registration of TI has changed and, at last, the tax authorities have issued a whole crib for the registration of TI in different situations.

Corporate Income Tax

The State Fiscal Service of Ukraine in its Individual Tax Advice informed that the successor assumes all rights and obligations of the enterprise, which is terminated as a result of reorganization, as a taxpayer, including the negative value of the object of tax levied on the company income tax.

It should be recalled that earlier representatives of the fiscal authorities had a cardinal other position. In particular, they have repeatedly stated that there is no reason for the successor to take into account last year’s losses of the liquidated enterprise (ІПК dated 15.03.2018, No.1026/ІПК/28-10-01-03-11, dated 16.01.2018, No. 163/6/99-99-15-02-02-15/ІПК, 23.10.2017, No. 2339/6/99-99-15-02-02-15/ІПК etc.).

USC

The Ministry of Finance of Ukraine by its Order “On Amendments to the to the Guidelines on the Procedure for Accruing and Payment of the Unified Contribution to the Compulsory State Social Insurance” of 04.05.18, No. 469 issued a new version of the Guidelines on the procedure for accrual and payment of the unified contribution to the compulsory state social insurance (hereinafter – Guidelines).

The changes are conditioned by the necessity to bring the normative act into conformity with the current legislation.

Innovations refer to individuals-entrepreneurs and members of the farm.

Thus, among the payers of the unified contribution were added the members of the farm (it should be reminded that they are payers of the unified contribution from January 1, 2018, but only now it was prescribed in the Guidelines). Accordingly, it is established:

• the procedure for determining the basis for calculating the unified payment for members of a farm: this is the distributed income (profit) received by such payers from the net profit of a farm in the reported year, subject to the income tax, divided by the number of months during which such a payer was registered as a unified payer;
• if such payers have not received income (profit) in the reporting quarter or a separate month in the reporting quarter, they will still have to pay the unified contribution, which cannot be less than the minimum insurance premium.

The amounts of the unified payment are calculated by these payers after receiving the share of distributed income (profit) from the net profit of the farm in the reported year and at the results of the inspection of their activities, which led to an increase or decrease in the share of such distributed income that is subject to the personal income tax. The unified contribution is paid once in a quarter to the 20^th of the month following the quarter for which the unified contribution is paid.

It is also established the procedure for calculating and payment deadlines for individual-entrepreneurs (with the exception of individual-entrepreneur who have opted for a simplified taxation system) and those who conduct independent professional activities (para. 4 of Section IV of the Guidelines):

• they calculate the unified contribution based on the data of annual tax declarations (annual reports) and the results of the audits of such persons, which led to an increase or decrease in the amount of income subject to the personal income tax. This takes into account the number of months during which such person was registered as a unified contribution payer;
• the unified contribution is to be paid by such payers once a quarter until the 20^th of the month following the quarter for which the unified contribution is paid. In this case, the amount of the contribution cannot be less than the size of the minimum insurance premium for each month of this quarter.

The revenue and fee bodies send a message-calculation to the said payers of the unified payment, which made up to January 1, 2017 accrual of USC in the amount less than the minimum insurance premium. They message-calculation indicates the calculation of the amount of such an additional payment, which was payable on the results of business activities for the reporting calendar year.

In addition, it has been established that during a special period and for the entire period of unlawful imprisonment in the territory of the territory of the anti-terrorist operation, individuals-entrepreneurs and persons engaged in independent professional activities, if they are not employers, as well as members of the farm, are exempt from their following obligations:

• in case of calling for military service during the mobilization or attraction for duties for mobilization by the positions provided by the wartime table of organization and equipment, - from the first calendar day of the month of the calling for military service during the mobilization of the payer until the last calendar day of the month in which the payer was demobilized or completed its treatment (rehabilitation);
• in the case of unlawful imprisonment in the territory of the anti-terrorist operation, from the first calendar day of the month of unlawful imprisonment until the last calendar day of the month in which the payer was released or completed his/her treatment (rehabilitation) necessary after his/her release.

The procedure for calculating and payment of the unified payment by individuals-entrepreneurs, persons who carry out independent professional activity and members of a farm economy in the event of their removal from the accounts in the bodies of revenues and fees:

• the last period for the individuals-entrepreneurs for which it is necessary to calculate and pay the unified contribution, is to be the period from the day of the end of the previous reporting period to the day of the state registration of the termination;
• for persons engaged in independent professional activities and members of a farm for the most recent period for which it is necessary to calculate and pay the unified contribution, is to be the period from the day of the end of the previous reporting period to the day of receipt by the body of revenues and fees of the application for the deregistration of the payer of the unified contribution.

Such payers pay the unified contribution within 10 calendar days after the deadline for submission of a report indicating the type of form “liquidation”.

Unified tax

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Stay in the Register of Unified Taxpayers of the Fourth Group” of 22.05.18, No. 2268/6/99-99-12-02-03-15/ІПК clarified what implications would have the agricultural enterprise – payer of the unified tax in case of untimely submission of the declaration with the sign “General” (after February 20).

Such a farmer should be excluded from the register of the unified tax payers, and he/she will have to pay taxes on the general tax system by the end of the year. It will not help, even if a farmer timely submitted a declaration of a unified payer with the type “Reporting” and the annexes to it 'Information on the availability of land plots”, “Calculation of the share of agricultural commodity production”.

It should be recalled that agricultural companies operating in Group 4 of the unified tax annually confirm their status. In order to do this, they should submit package of documents to the tax agency up to 20 February, which includes:

• general tax declaration for the current year for the total area of the land plots from which the tax is levied (agricultural land (arable land, grassland, pastures, perennial plantations) and / or lands of the water fund of internal reservoirs (lakes, ponds and reservoirs);
• reporting tax declaration for the current year separately for each land plot;
• calculation of the share of agricultural commodity production - it calculates the share of sales of agricultural products in the total amount of income. It must be at least 75%;
• information (certificate) on the availability of land plots.

The other taxes and fees

The President of Ukraine signed the Law of Ukraine “On Amendments to Section II “Final and Transitional Provisions” of the Law of Ukraine “On Amendments to Certain Laws of Ukraine on Reduction of Deficit of Ferrous Metals Scrap in the Internal Market” of 17.05.18, No. 2434-VIII. The mentioned Law extended the export duty on waste and scrap of ferrous metals for a term of 3 years.

Also, the export duty rates on such goods increased from 30 euros/t to 42 euros/t. The above changes are caused by an increase in the cost of waste and scrap of ferrous metals in foreign markets. Therefore, tariff regulation needed a correction to restore the effect of customs duties.

Accounting and Reporting

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for Maintenance and Repair of Cash Registers” of 13.06.18, No. 496 amended the procedure for repair and maintenance of cash registers. In general, two main innovations can be distinguished.

The first concerns the service centers. As planned, from now on, all documents that the service center generates when introducing cash registers into operation and during its maintenance, the service centers will independently send to the representatives of the fiscal department in electronic form. Previously, the owners of cash registers were involved in this documentary chain.

The second innovation concerns manufacturers of cash registers. From now on, fiscal authorities keep a register of copies of cash registers. They will form it on the basis of data, which manufacturers of cash registers, not later than the day of their delivery, are obliged to send to SFSU.

Such data should include information about:

• the name of the cash register model, its scope and version of the internal software (according to the State Registry of the cash registers);
• unique (serial) number of the registrar;
• date of manufacture;
• warranty period of storage;
• warranty period of operational activity;
• register’s lifetime, etc.

The Cabinet of Ministers of Ukraine adopted a strategy by which the system of accounting and financial reporting for the state sector will be fully modernized by 2025. This is reported on the official website of the Ministry of Finance of Ukraine.

Government officials plans provided:

• creation and implementation of an information and analytical system for accounting and financial reporting by enterprises of the state sector;
• systematization of accounting processes;
• improvement of the formation of organizational structure of accounting services;
• improvement of the system of training and retraining of profile specialists.

At present, the strategy for improving the accounting and financial reporting is partly implemented. In particular, the Ministry of Finance has already managed to approve for enterprises of the state sector: an account plan, national accounting standards, new forms of financial reporting and the order of their filling, etc.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On accounting for the value of fixed assets depreciated in the tax accounting, the liquidation value of the object of fixed assets” of 18.05.18, No. 2212/6/99-99-15-02-02-15/ІПК emphasized: the income tax payer  in determining the value of depreciable fixed assets, including in tax accounting, calculates the liquidation value of fixed assets determined in accordance with accounting rules, unless otherwise provided accounting policies.

Consequently, if in the accounting of the company, liquidation value is established for fixed assets, then when calculating tax depreciation, it should be deducted from the initial value of such objects.

It is recalled that the liquidation value of an asset is a pre-estimated amount that the business entity would receive at the current time from the disposal of an asset after deducting all pre-estimated expensed of disposals, if the asset is out of date and is in a state expected after the expiry of its useful life exploitation.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On clarification of the tax declaration on the income tax of a company for the reporting tax periods subject to the retrospective adjustment and re-formation of financial reporting in connection with the preparation of the first IFRS reporting” of 24.05.18, No. 2322/6/99-99-15-02-02-15/ІПК reported that the clarification of the reporting periods preceding the transition to IFRS was carried out by the payer only in the event of errors detected, in particular in the financial statements, which led to underestimation/overestimation of tax liabilities on the income tax.

That is, when a taxpayer transfers to IFRS and performs retrospective adjustments to the date of transition (as required by IFRS 1, “First-time application of International Financial Reporting Standards”), no clarifying declarations are required.

An exception is if, at the time of such a transition, the accounting errors affected on the object of taxation of the income tax were found. Errors correction of in this case is under general rules.

The Ministry of Ecology and Natural Resources of Ukraine by its order “On Approval of the Application Form for Obtaining a Permit for Special Water Use” of 12.04.18, No. 116, approved the application form for obtaining a permit for special water use. This form has been developed in accordance with the updated procedure for obtaining a permit, which is assigned in Art. 49 of the Water Code of Ukraine. It specifies: in order to obtain the right for special use, in addition to the application, an individual or legal person must collect an exhaustive list of documents:

• justification of the need for water with the monthly calculation of the water use and drainage standard;
• description and scheme of water collection and reverse water discharges;
• norms of the maximum allowable discharge of pollutants;
• approved individual technological norms for the use of drinking water (for enterprises and organizations of housing and communal services, business entities that provide services for centralized water supply and/or drainage, housing and utilities enterprises and organizations);
• a copy of the legal documents for water objects (for tenants of water objects).

The applicant must submit a complete set of documents to the territorial body of the central executive authority, which implements the state policy in the field of water management development.

The Ministry of Finance of Ukraine by its Order “On Amendments to the Order of the Ministry of Finance of Ukraine dated 14.06.2016, No. 547” continued to make amendments to the cash register sphere. A number of innovations have been already developed, which include, inter alia, registration and sealing procedures for cash registers.

Amendments to the Order of Registration of cash registers are as follows. From now on, for the registration of PPOs (cash registers), business entities must submit only application form No. 1-PPO to the controllers. That is, it is no longer required to submit copies of the documents listed in para. 4 of chap. 2 of sec. II of Procedure for registering of cash registers.

Also, cases where controllers may refuse registration of cash registers increased. In particular:

• if the entity has not reported fiscal authorities regarding the existence of an entity, as required by paragraph 63.3 of TCU;
• if the tax authorities have not received from the Service Center (hereinafter - SC) a notice on the conclusion of an agreement with them, or if such a notice indicates that the contract has been terminated or terminated;
• if there is evidence that cash register is counted as stolen.

Now interaction of fiscal authorities and SC-authorities will be only through electronic communication.

There are also amendments to cash registers sealing procedure. Thus, SC will be forced to send controllers notice of contracts on service concluded with them. And also inform about termination or amendment of the contract.

The SCs will be required to send to the controllers by e-mail a certificate of sealing the cash registers and the act of introducing cash registers into operation. As well as a copy of the certificate in case of re-registration and subsequent re-sealing of cash registers. At present, all these documents are supplied by the business entities to the tax authorities independently.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the revision in the tax accounting of the useful life of fixed assets in the event of changes in accounting as a result of improvement of the fixed asset (modernization, reconstruction) and revaluation” of 11.06.18, No. 2563/6/99-99-15-02-02-15/ІПК reported: if there  was carried out improvement or revaluation of a fixed asset (hereinafter – FA) in the accounting, the useful life period should not revised for the purposes of tax-profit purposes.

It should be recalled that para. 138.3.3 of the Tax Code of Ukraine (hereinafter – TCU), the minimum allowable useful life periods for the groups of FA are specified. At the same time, if longer terms are set in the accounting, for the calculation of tax amortization, they use the highest values.

The rule of choosing the useful life period under para. 138.3.3 of TCU relates both to the integral object of FA and its components that are accounted for separately.

Control and Responsibility

The Cabinet of Ministers of Ukraine adopted the Resolution “On Amending Certain Resolutions of the Cabinet of Ministers of Ukraine” of 10.05.18, No. 353 which allowed companies not to use seals during the retail sale of alcohol and oil products. In order to certify the accompanying documents for the products, it is enough to indicate the signature of the responsible person.

This decision was made on the basis of the requirements of the Law of Ukraine “On Amending Certain Legislative Acts of Ukraine on the Use of Seals by Legal Entities and Individual Entrepreneurs” of 23.03.17, No. 1982-VIII.

The relevant changes were made to a number of documents:

• Rules for the retail trade in alcoholic beverages, approved by the CMU Resolution No. 854 of 30.07.96;
• Rules for retail trade in oil products, approved by the CMU Resolution No. 1442 of 20.12.97;
• Procedure for warranty repair (servicing) or warranty replacement of technically complex household goods, approved by the CMU No. 506 of 11.04.02.

The Ministry of Finance of Ukraine in its letter “On the powers of local self-government bodies in making decisions on the establishment of local taxes and duties” of 26.03.18, No. 11230-17-10/8220 reminded: if the local government did not make a decision on the establishment of appropriate local taxes and fees, then payers should use the minimum rates (with the exception of payment for land – it should be levied using rates applied until December 31 of the previous year). Since only upper limit of the rate has been set for most of the local taxes and fees in the TCU, the minimum rate for such taxes (fees) is equal “0”.

It should be recalled that the local government sends controllers a copy of the decision on the establishment of local taxes or fees not later than July 1, the year preceding the budget period, in which it is planned to apply the established local taxes and fees. Taxpayers can find consolidated information on the size and date of setting local tax rates and fees in the respective territories on the official portal of the State Fiscal Service of Ukraine. Such data should be made public no later than July 15 of the current year.

The State Property Fund of Ukraine by its order “On Approval of the Procedure for Maintaining a Unified Database of Evaluation Reports” of 17.05.18, No. 658 approved a new Procedure for maintaining a unified database of evaluation reports in connection with the introduction of amendments to Art. 172 of the Tax Code of Ukraine (hereinafter - TCU) regarding provision of the estimated value of property for the purpose of calculating the income of a taxpayer - an individual from the sale (exchange) of property (except cases of inheritance and donation of property.

 According to the new wording of Article 172 of TCU, the proceeds from the sale of the property are determined on the basis of the price specified in the contract of sale, but not lower than the estimated value of such an object, calculated by the authority authorized to carry out such a valuation in accordance with the law (entity valuation activity), and Registered in the unified database of evaluation reports (hereinafter – the Unified Base). Although the amendments came into force on 01.01.18, the new Procedure for maintaining the database of evaluation reports appeared only now.

Consequently, from now on the Unified Base will contain a database and a module for the electronic determination of the estimated value, similar to the property valuation object. When registering a valuation report, the Unified Base will monitor the information from the evaluation report made by the valuator for the absence of violations during its compilation, in particular, its completeness and compliance with the valuation value determined by the appraiser, which is verified by the module of electronic determination of the estimated value of property similar to the object of valuation.

The result of the electronic determination of the estimated value, carried out by the module of the Unified Base, is applied within +/- 25% of the indicator value.

In the case of completeness, correctness and compliance of the information from the assessment report made by the entity of valuation activities, including the compliance of the appraised value of the property, property rights with the limits set by the indicator, the Unified Base registers the valuation report with the assignment of a unique number to it simultaneously formation of a reference for entering information from the valuation report into the unified evaluation report database.

The reference for entering the information from the valuation report to the Unified Database is included in the valuation report.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Application of Penalties in the Case of Untimely Payment to the State Budget of a Part of the Net Income” of 07.06.18, No.2527/6/99-99-15-02-02-15/ІПК reported that the tax authorities had no grounds for applying fines under Art. 123, 126 of the Tax Code of Ukraine (hereinafter – TCU) to state enterprises in case of non-payment of part of profit (income). The reason – this payment is not a tax liability. Although its declaration and payment (code 21010100) is carried out in accordance with the procedure foreseen for the company income tax, and the control over its deduction is charged to the SFSU.

Representatives of the fiscal department have already expressed such a position earlier. True, then it was only about the exclusion of penalties under Art. 126 of TCU.

The Deposit Guarantee Fund by its Order “On Approval of the Amendments to the Regulation on the Procedure for Compensation by the Deposit Guarantee Fund of funds held on deposit” of 02.04.18, No. 948 made amendments to the Procedure for the compensation by the Deposit Guarantee Fund (hereinafter – the Fund) of funds held on deposit. In particular, the Fund will pay a guaranteed amount of claims for compensation. They must be sent (submitted) to the Fund not later than the day of submission of documents for the entry into the Unified State Register record of liquidation of the bank as a legal entity.

It is also determined that the payment of compensation for deposits opened in the name of a person recognized as incapacitated by the court or whose civil capacity is limited is paid to the guardian (trustee).

It should be recalled that the amount of the maximum amount of compensation for deposits is UAH 200 thousand. Up to the present day the law has not obliged individuals to claim compensation for the contribution to that amount.

Labor and Salaries

The Cabinet of Ministers of Ukraine adopted the Resolution “Some Issues of the Implementation of the Pilot Project on Social Protection of Families with Children and Supporting the Development of Responsible Paternity” of 30.05.18, No. 427, according to which the Government will compensate for the services of a babysitter for families whose mother refused to take maternity leave and went to work. It will be possible to take advantage of this privilege from 01.01.19.

The Cabinet introduces such a concept as a “municipal nanny”. Thus, when a family in which parents refused to take maternity leave, hires a babysitter, the state compensates for the cost of his/her services in the amount of one living wage. This is about UAH 1 500 for each month of nanny’s work.

Tin order to receive funds from the state, parents will have to sign a formal employment agreement with the nanny.

The Ministry of Social Policy of Ukraine in its letter “On Taking into Account the Premium When the Calculation of Leave Allowances” of 23.04.18, No. 659/0/101-18 clarified: if the premium was accrued in the month in which the employee was on leave without salary saving (full month), then the amount of the premium and the days during which the employee was on such leave should not be taken into account when calculating the leave allowances.

The agency analyzed the situation when the employee was on leave without saving salary on the basis of para. 6 of Art. 25 of the Law of Ukraine “On Leaves” of 15.11.96, No. 504/96-ВР for a whole month (30 calendar days), and for this month the premium was accrued for him/her.

Para.6 of sec.2 of the Procedure for Calculation of the Average Salary, approved by the Resolution of the Cabinet of Ministers of Ukraine of 08.02.95, No. 100, stipulated that the time during which the employees, in accordance with the current legislation or under other valid reasons, did not work and earned or saved therefor partly, should be excluded from the accounting period. It is this norm that specialists of the department refer to, concluding that they are not included in the calculation of leave allowances accrued for the month in which the employee was on leave at his/her own expense.

If the employee was given a shorter leave or was given not from the beginning of the month, and in the month when the employee was paid premium, there are at least several working days and days off, then the said premium should be taken into account on average earnings, the agency notes.

Court Rulings

The Supreme Court of Ukraine issued its Resolution of 23.05.18 in the case No. 902/474/16 on the lawful placement of the inscription “only natural 100%” on the packaging of the products.

According to judges, it is only possible to place such an inscription on the product if it is natural in essence. That is, the product was selected directly from nature and was not processed.

If the product does not meet the specified requirements, and on its packaging (or in television advertising) is such an inscription - the manufacturer actually misleads consumers.

According to the court decision: “Marking of food products should provide the potential consumer with information about a food product that is relevant to its nature, identity, origin, and other. While the package contains the words “only natural 100%”, do not correspond to the specified criteria”.

Consequently, the manufacturer provided consumer benefits to products not because of their own achievements and fair competition, but through the spread of deceptive information.

The Supreme Court of Ukraine supported the decision of the previous instances. For such a breach the manufacturer was fined in the amount of UAH 40 000.

Financial Markets

The National Bank of Ukraine in its letter “On Limitations of Cash Settlements” of 22.05.18, No. 50-0007/28247 disclosed its position regarding the scope of the cash limit in the amount of UAH 50 thousand between companies and individuals. The regulator explained that such a restriction applies to settlement of transactions, the subject of which are any tangible and intangible benefits that can be evaluated in cash, including the issue and return of funds to be accounted, financial assistance, payments related with wages.

Consequently, issuing of funds to be accounted and payment of wages to employees in the amount exceeding UAH 50 thousand should be in non-cash form.

It should be recalled that recently the NBU explained its point of view regarding cash restrictions on contributions to the statutory fund of the enterprise and the provision of financial assistance. The regulator also believes that during such calculations, individuals must adhere to the cash limit of UAH 50 thousand. And the amounts above the established amount can be transferred through the bank.

The National Bank of Ukraine by its Resolution “On Approval of Amendments to the Rules for the Implementation of Transfers of Individuals Beyond Ukraine and in Ukraine under Current Foreign Currency Non-Transactions and Their Payments in Ukraine” of 07.06.18, No.62 amended the Rules of Implementation beyond Ukraine and in Ukraine Transfers of individuals under current non-traded currency transactions and their payments in Ukraine.

From now on, banks and their clients (resident individuals) are given the opportunity to apply modern Paperless communication technologies while transferring foreign currency. In particular, bank customers will be able to submit electronic copies of confirmation documents for foreign currency transfers outside Ukraine from current accounts in foreign currency. Banks will have the opportunity to create electronic copies of the confirmation documents submitted by individuals to carry out the transfer in paper form, for their further storage.

Also, individuals will be able to initiate a foreign currency transfer in Ukraine through the international payment system with the help of an international payment system. And by the decision of the sender of the transfer initiated from abroad in foreign currency, get such a transfer in Ukraine in hryvnia (that is, in a currency other than the currency of its initiation).

The above changes came into force from 12.06.18.

The National Bank of Ukraine by its Resolution “On Amendments to Certain Legislative Acts of the National Bank of Ukraine” of 07.06.18, No. 63 amended the Guidance on the Procedure for the Organization and Execution of Foreign Exchange Transactions in the Territory of Ukraine.

The updated National Bank document simplifies the registration of currency exchange transactions by banks and other financial institutions.

To this day, banks had to issue two paper copies of a receipt for such a transaction - one for the client, one for storage in a bank. In the future, banks will be able to issue receipts for a currency exchange transaction, not only in paper form, but also in electronic form. Accordingly, banks will be able to store relevant documents in electronic form. Also, with the consent of the client, the bank will have the opportunity not to issue a paper document to the client.

Other financial institutions that exchange currency are currently required to issue two paper copies of the receipt and two paper settlement documents printed by the cash register. In the future, they will process currency transactions only by one document for clients – a document that is printed by the cash register. Accordingly, they will not issue a receipt for the currency exchange transaction to customers.

At the same time, banks and financial institutions will not require a customer’s signature on the receipt or document of the cash register, if the amount of the currency exchange transaction is less than UAH 150 thousand.

The National Bank also provides an opportunity for banks and financial institutions to conduct currency exchange transactions through payment devices. After the payment device’s software has been revised by these institutions, individuals can not only sell but also buy foreign currency cash with the use of these devices.

In addition, banks and financial institutions will be able to issue accounting documentation for currency exchange transactions in the form of an electronic document.

For the introduction of new requirements regarding the use of the cash register in the exchange of currencies through payment devices and the execution of relevant settlement documents of the cash registers, receipts and checks of the ATM, financial institutions were granted a 6-month transition period. During the second half of this year, they will execute currency exchange transactions in accordance with the procedure that was still in force. They will start to conduct currency exchange transactions under the new rules from 01.01.19.

The National Securities and Stock Market Commission (NSSMC) by its decision “On Approval of Amendments to the Regulation on the Information Disclosure by Securities Issuers” of 19.04.18, No. 243 cardinally updated the Regulation on disclosure of information by securities issuers, approved by the decision of the NSSMC. Specific information about the issuer of securities will now include, in particular, the following information:

• making a decision on the placement of securities for an amount exceeding 25% (and not 10% as before) of the authorized capital;
• availability, validity and parties of the share agreement;
• persons concerned in the commission of company transactions with interest, and circumstances exist which creates interest;
• change of shareholders, which include voting shares, the size of which package becomes larger, smaller or equal to the threshold value of the block of shares;
• change of persons who are the owners of financial instruments related to voting shares of a joint-stock company in the event that the total amount of rights under such shares becomes larger, less or equal to the threshold value of the block of shares;
• initiation of a proceeding on compensation of the issuer for losses incurred by an official of such an issuer;
• bankruptcy proceedings issuer ruling on its reorganization;
• decision of the issuer or court of a higher authority on the termination or bankruptcy of the issuer;
• notice of redemption of shares beyond the threshold of the shareholding;
• changes to the charter related to the change of shareholders rights;
• number of voting shares and the size of the authorized capital as a result of its increase or decrease, etc.

It should be recalled that such special information is required to be disclosed by issuers of securities. Disclosure should be made publicly available in the publicly accessible NSSMC information database, published in the official printed publication, placed on its own web site and submitted to the National Commission.

Also, the NSSMC officially confirmed that the issuers of securities should also disclose an audit report on financial statements (consolidated financial statements (if any) and a conclusion on the review of interim financial reporting (interim consolidated financial reporting (if any). At the same time, the report and the conclusion must be in line with International Standards on Auditing.

The Other Things

The Cabinet of Ministers of Ukraine adopted the Resolution “On Amendments to certain Resolutions of the Cabinet of Ministers of Ukraine” of 06.06.18, No. 445, which stipulates that the victims of the Revolution of Dignity will receive pension payments in the amount established for the participants in hostilities.

If the monthly amount of pension payments to affected Victims of the Revolution of Dignity will not reach 165% of the subsistence minimum for people who have lost their ability to work, they will be paid monthly state targeted assistance to a pension in an amount that is not sufficient to the specified amount.

The document was adopted with the purpose of ensuring the implementation of amendments to the Law of Ukraine “On the Status of War Veterans, Guarantees of Their Social Protection” of 22.10.93, No. 3551-XII.

The Ministry of Agrarian Policy and Food of Ukraine in its letter “On the use of funds for partial compensation of the cost of agricultural machinery” of 16.05.18, No. 37-16-15/13794 clarified the conditions under which an agrarian enterprise may claim partial compensation for the cost of agricultural machinery of domestic production. One of the important conditions is that the calculations for the machinery should be carried out through a state bank or a bank in the authorized capital of which 75% and more of the shares belong to the state. These include Oshchadbank, Ukreksimbank, Ukrgasbank, PrivatBank.

Partial compensation is provided to agricultural producers which purchased machinery and equipment from manufacturers or their dealers from January 1, 2018. The state compensates farmers 25 percent of the cost of equipment (excluding VAT), and farms can additionally receive partial compensation of 15 percent of its value.

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Procedure for Transferring Utility Services to the Operator of External Engineering Networks paid by utility users and owners (co-owners) of premises equipped with individual heating and/or hot water supply systems, contributions for installing nodes of revenue metering” of 13.06.18, No. 477 approved the Procedure for transferring funds by the executor of the utility services to the network operator for the installation of meters. This Procedure is a clear statement of the actions of the executor (condominium associations, housing and public services, etc.). For example, it is determined that:

• the executor counts the contributions of utility users to a separate account and transfers the contributions to a separate account of the operator of the external engineering networks;
• the executor keeps a record of the paid contributions received on own account from consumers separately for each building;
• contributions paid by the user to the operator of the external engineering networks should be transferred to the operator no later than the 5^th day of the month following the settlement quarter, if the agreement between the parties does not set another term;
• the amount of funds transferred by the executor to the operator of external engineering networks is 100% of the total amount of contributions received from the account of the executor from the consumers and owners (co-owners) of the premises.

The Procedure also approved the Model Contracts for the Transfer of Contributions.