Legislation Overview (April 2018)

Taxes

VAT

The Ministry of Finance of Ukraine by its Order “On Amendments to the Order of the Ministry of Finance of Ukraine dated January 28, 2016 No. 21” of 23.03.18, No. 381 amended the VAT declaration form and the procedure for its completion.

In particular, the new edition stated:

• Annex D1 “Adjustments Calculation of Value Added Tax”;
• Annex D5 “Decoding of tax liabilities and tax credit in the context of counterparties”;
• Annex D9 “Calculation of tax liabilities for transactions specified in Article 16-1 of the Law of Ukraine “On State Support to Agriculture of Ukraine”, and the Share Weight of Agricultural Goods”.

Annex D5 is supplemented with the new table 1.2. “Information on the amount of value added tax, indicated in the tax invoices, drawn up from July 1, 2015 and not registered in the Unified Register of Tax Invoices on the date of submission of the tax declaration form on the value added tax (except for tax invoices, which are compiled in the reporting (tax) period for which such a declaration is submitted and which are not registered in the Unified Register of Tax Invoices indicated in Table 1.1 (D5) (Annex 5) are included in the amount of tax liabilities for the previous reporting (tax) periods”. It should be decoded in it the tax liabilities on counterparties under blocked tax invoices. However, this table should be filled in once for the reporting (tax) period, for which the VAT return is first submitted, taking into account the amendments.

An order of the Ministry of Finance shall enter into force on the first day of the month following the month of its official publication. If the publication takes place in April, then VAT payers must report under an updated form, starting with the June declaration. But the controllers may have a different position.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Calculation by the Payer, Which Applies the Cash Method of VAT, of Tax Obligations in Writing off Receivables from Consumers” of 27.03.18, No. 1242/6/99-99-15-03-02-15/ІПК reports that the cancellation of overdue receivables for supplied and unpaid goods (services) can be costly for the taxpayer who applies the cash method. Representatives of the fiscal department require of the VAT payer to calculate tax liabilities during such a transaction. In their view, the write-off of accounts receivable is the receipt by the payer of other types of compensation.

The State Fiscal Service of Ukraine introduced a new service in the Electronic cabinet - a separate Register of Tax Invoices/adjustment calculations, the registration of which was stopped (hereinafter – Register). This is reported on the official website of the SFSU.

The Register is located in the open area of the Electronic Cabin.

The search of information in the Register is carried out according to the following filters: “Individual tax number”, “Number of TN/RK”, “Date of preparation of TI/RK”.

The Register contains information on tax invoices/adjustment calculations, the registration of which was suspended and decided by the relevant commissions, as well as administrative and judicial appeals procedures.

The register is still in the test mode. In the part of formation in the open access of a separate register, the electronic cabinet was amended in accordance with paragraph 8 of the Procedure for the suspension of the registration of a tax invoice/adjustment calculations in the Unified Register of Tax Invoices, approved by the Resolution of the Cabinet of Ministers of Ukraine of February 21, 2018, No. 117 “On Approval of Procedures for Suspension of Registration of Tax invoice/adjustment calculations in the Unified Register of Tax Invoices”.

The State Fiscal Service of Ukraine in its Individual Tax Advice informed that an electronic customs declaration (hereinafter – CD), drawn up with the help of an automated system of customs clearance, confirming payment of VAT, to be the basis for the formation of a tax credit.

At the same time, representatives of the fiscal department stressed that in the case of customs clearance of goods using electronic CD, registration of electronic CD on paper is not required.

An electronic CD is considered to be executed in the presence of an official entered into by the customs authority who has completed the customs clearance with the help of the automated system of customs clearance of the mark on the completion of the customs clearance and the certification of such a declaration by an electronic digital signature of the official of the customs authority that completed the customs clearance.

An electronic CD with an automated system of customs clearance is converted into a visual form suitable for perceiving its content by a person in a format that makes it impossible to make subsequent changes to it, is evidenced by an electronic digital signature of an official of the customs authority who has completed the customs clearance and is sent to the declarant or an authorized person.

Corporate Income Tax

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Adjustment of Financial Results to Taxation” of 27.03.18, No. 1260/6/99-99-15-02-02-15/ІПК reported that the provision of fulfilment of obligations (deposit), which is not subject to return in the event of violation of the terms of the contract, falls under the definition of a forfeit. Since the forfeit (fine, penalty) is a monetary amount or other property that the debtor must transfer to the creditor in case of violation by the debtor of the obligation (para. 1 and 2 of Art.549 of the Civil Code of Ukraine).

Consequently, for tax-profit purposes, the amount of funds transferred, which are not returned to the payer in connection with the violation of the obligation, it is necessary to increase the financial result before tax in accordance with para. 140.5.11 of the Tax Code of Ukraine (hereinafter – TCU). Such a rule applies if the funds are paid in favour of persons who are not taxpayers (except for individuals) and taxpayers who are taxed at the rate of 0% under para.44 of sub-para.4 of sec. XX “Transitional provisions” of TCU.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Reducing the Financial Result Before Taxation to the Amount of the Negative Value of the Object of Taxation of Previous Years in the Event of a Change in the Type of a Joint-Stock Company” of 27.03.18, No. 1240/6/99-99-15-02-02-15/ІПК reports that the change in the type of a joint-stock company does not deprive the one who have profit of the right to reduce the financial result before taxation to the amount of the negative value of the object of taxation of previous years.

According to the representatives of the fiscal department, during the change of type of a joint-stock company from a public to private one, termination of the partnership does not occur. Consequently, it has the full right to take into account last year’s losses due to the reduction of the object of taxation for subsequent reporting periods after the introduction of such changes.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On reducing the financial result before tax on income accrued from participation in the capital of the unified tax payer of the fourth group” of 16.04.18, No. 1617/6/99-99-15-02-02-15/ІПК reports that the dividends, which are accrued by the unified tax payers to the benefit of the income tax payer, do not reduce its financial result before tax. That is, the accrued dividends should be taken into account as a part of income by the income tax payer.

This norm entered into force from 01.01.18 along with other amendments made to TCU. Consequently, from this year, the duty to pay the income tax from such investment accounting incomes was shifted from the shoulders of the unified tax payers to the shoulders of investors-payers of the income tax.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the adjustment of the financial result before taxation to the amount of the write-off of deficiencies of values beyond the norm, found during the inventory and shortages because of thefts” of 18.04.18, No. 1702/6/99-99-15-02-02-15/ІПК reported: if the company found a shortage due to inventory or in connection with the theft, this situation would affect the tax-profit accounting solely in accordance with the accounting rules.

At the same time, if there was a shortage of fixed assets (hereinafter – FA), representatives of the fiscal department ordered to apply the differences under para. 138.1—138.2 of TCU – to increase the financial result on the amount of book value of stolen FA and reduce it on the amount of residual value, calculated in accordance with the norms of Art.138 of TCU.

PIT and War Tax

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the taxation of income in the form of the value of the property received as the gift” of 22.03.18, No. 1184/З/99-99-13-02-03-14/ІПК reported: if an individual receives a gift or inheritance from a family member of the second degree of kinship, then the value of the property received as a gift is taxed at zero rate. Accordingly, there is no need to pay the war tax.

Family members of the second degree of kinship consist of siblings, grandparents and grandchildren (para.14.1.263 of TCU).

In case of receiving such a gift (inheritance), the individual is also exempted from submitting a declaration of income, provided that there are no other reasons for submitting the declaration.

The President of Ukraine signed the Law of Ukraine “On Amendments to Section VIII “Final and Transitional Provisions” of the Law of Ukraine “On the Collection and Registration of the Unified Contribution to the Mandatory State Social Insurance” No. 2373-VІІІ in connection with the preparation and holding of the final UEFA Champions League matches and UEFA Women’s Champions League for the season 2017/2018 in Ukraine” adopted by the Verkhovna Rada of Ukraine on March 22, 2018.

The law provides for the temporary release, until 01.06.18, of exempting from the accounting and payment of the unified social contribution, as well as the income tax and the war tax, representatives or officials of the associations - members of the UEFA; members of the delegations participating in the final matches, including members of the teams who have won the right to participate in the final matches; individuals accredited by UEFA, in particular staff and temporary workers, representatives of the media, UEFA partners, and sponsor representatives.

In addition, it is exempted from company income tax the revenue received before May 26, 2018, including UEFA and / or its related parties, from the transfer and/or use of commercial rights regarding the final matches of the UEFA Champions League and the UEFA Women’s Champions League for the season 2017/2018.

Unified Social Contribution

The President of Ukraine signed the Law of Ukraine “On Amendments to Section VIII “Final and Transitional Provisions” of the Law of Ukraine “On the Collection and Registration of the Unified Contribution to the Mandatory State Social Insurance” No. 2373-VІІІ in connection with the preparation and holding of the final UEFA Champions League matches and UEFA Women’s Champions League for the season 2017/2018 in Ukraine” adopted by the Verkhovna Rada of Ukraine on March 22, 2018.

The law provides for the temporary release, until 01.06.18, of exempting from the accounting and payment of the unified social contribution, as well as the income tax and the war tax, representatives or officials of the associations - members of the UEFA; members of the delegations participating in the final matches, including members of the teams who have won the right to participate in the final matches; individuals accredited by UEFA, in particular staff and temporary workers, representatives of the media, UEFA partners, and sponsor representatives.

In addition, it is exempted from company income tax the revenue received before May 26, 2018, including UEFA and/or its related parties, from the transfer and/or use of commercial rights regarding the final matches of the UEFA Champions League and the UEFA Women’s Champions League for the season 2017/2018.

Other Taxes and Fees

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Taxation of Investments in the Case of Returning to a Non-Resident” of 16.04.18, No. 1664/6/99-99-15-02-02-15/ІПК reported that the return of share in the authorized capital of Ukrainian company to a non-resident was not considered to be a foreigner’s income. Consequently, there is no tax on repatriation regarding such a transaction.

However, in the case of transfer of income from investments that are returned – such income is taxed in accordance with para. 141.4 of the Tax Code of Ukraine (hereinafter – TCU) or in accordance with the rules of international treaties on avoidance of double taxation.

Accounting and Reporting

The Ministry of Finance of Ukraine in its General Tax Advice on the need to apply to the court to declare the debt to be bad in accordance with sub-sec. “a” of para.14.1.11 of para. 14.1 of Art. 14 of the Tax Code of Ukraine, approved by the order of the Ministry of Finance of Ukraine dated 03.04.18, No. 400, reported: in order to recognize the debt to be bad, only one condition is sufficient – the expiry of the limitation period.

There are no other conditions required by the Tax Code of Ukraine for recognizing the bad debt. That is, the payer-lender does not need to take any measures to collect the debt, in particular, through the court, the recognition of the debtor bankrupt, etc.

Consequently, the expiry of the limitation period is sufficient to declare such a debt to be bad debt, regardless of whether the creditor appealed to the court in order to collect it.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the calculation of depreciation on the leased premises” of 04.04.18, No. 1369/6/99-99-15-02-02-15/ІПК clarified whether the “depreciation” differences in the case of improvement of the rented premises.

Since the cost of improving the rented premises in the account of the lessee leads to the creation of a new fixed asset (sub-para. 2 of para. 8 of Accounting Standard 14 “Lease”) – the adjustment from para. 138 of TCU should be carried out.

Consequently, profit makers using the differences must:

• increase the financial result before tax to the amount of accrued depreciation for such a fixed asset in accordance with Accounting standards or IAS (para. 138.1 of TCU);
• reduce the financial result before tax to the amount of the estimated depreciation of such a fixed asset in accordance with para.138.3 of TCU (para. 138.2 of TCU).

The Ministry of Finance of Ukraine by its Order “On Approval of Amendments to the Procedure for Preparing Budget Reporting by Managers and Recipients of Budgetary Funds, Reporting by Mandatory State Social and Pension Insurance Funds” of 02.03.18, No. 340 approved amendments to the Procedure for Preparing Budget Reports.

The most important changes are:

• reporting to the Treasury bodies can be submitted electronically using the automated system for submitting electronic reporting by the clients of the State Treasury – АС “Є-Звітність” (E-Reporting system);
• reporting of recipients of budget funds, in the staff list of which there are no persons having the right of the second signature, signed by persons who have the right of first signature;
• if the reporting is submitted using the E-Reporting system, the number of sheets for each form of reporting is not indicated in the covering letter;
• in the new wording, Appendix 7 and Annex 22 are given;

Annex 20 “|Reference on the allocation of own revenues that exceed the corresponding expenditures approved by the law on the State Budget of Ukraine (local budget decision)” is excluded.

The Ministry of Finance of Ukraine by its Order “On approval of the form of the Act of non-conformity of the goods to the information specified in the documents required for the performance of their customs control, the damage to the goods, their packaging or labelling or their loss” of 15.03.18, No. 364 approved the form of the Act of non-conformity of the goods with the information specified in the documents necessary for their customs control, the damage to the goods, their packaging or marking, or their loss (hereinafter – Act).

The act should be prepared by enterprises moving goods across the customs border of Ukraine. It is made in the presence of an officer of the Customs SFSU, whose area of activity found:

• non-conformity of the goods with the information specified in the documents necessary for their customs control;
• damage to the goods, their packaging or labelling;
• total or partial loss of goods.
• The act may consist of 4 copies, if necessary – in more copies:
• the first copy is intended for the enterprise moving goods across the customs border of Ukraine;
• the second one – for the Customs SFSU at the place of its making;
• the third one – for the Customs SFSU appointment (if the Act is in the area of customs of appointment, the third copy does not consist);
• for the fourth one – for the owner of the goods;
• additional copies – to the declarant, sender, receiver, etc.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Application of cash registers in providing special codes, coupons, certificates, bonus codes, etc. and electronic vouchers for mobile communication services to clients remotely through the Internet” of 16.04.18, No. 1667/6/99-99-14-05-01-15/ІПК considered the company’s request for the use of cash registers in the case of distant selling of coupons, bonus codes, certificates, electronic vouchers via Internet. Supplying of such codes and vouchers will be carried out by sending an encrypted file on a specially selected data channel or by a specified e-mail.

Representatives of the fiscal department reported: if the funds for coupons, codes and vouchers are paid by consumers through the Internet or in non-cash form (from the account to the account) – the company does not necessarily apply the cash register.

Direct sale of goods to customers for such codes and coupons must be carried out using the cash register and issue a check indicating the appropriate form of payment.

Control and Responsibility

The President of Ukraine signed the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine to Authorize Local Governments to Restrict the Sale of Beer (Except Non-Alcoholic), Alcohol, Low-alcohol Beverages, Table Wines” of 22.03.18, No. 2376-VIII. This law authorizes village, town and city councils with powers to impose a ban on the sale of beer (other than non-alcoholic), alcoholic beverages, low-alcohol beverages, table wines at certain times of the day within the respective administrative territory. Of course, such prohibitions do not apply to catering establishments.

The fine is from 510 UAH to 1 700 UAH for violation of the law. However, it is the employee who sold alcoholic beverages at the forbidden time to be brought to administrative liability.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to Certain Acts of the Cabinet of Ministers of Ukraine” of 18.04.18, No. 286 amended the rules of consideration of complaints in the field of state registration and the procedure for accreditation of subjects of state registration.

Thus, the persons invited for consideration of the complaint on the merits will be informed about the time and place of its hearing not later than two days before the appointed day.

At the same time, those who are invited for consideration of the complaint on the merits (apart from the complainant) will be provided with copies of the complaint and the documents attached to it.

The period during which a legal entity of public law will not be able to obtain accreditation after the abolition of such one by the Ministry of Justice, has been increased to five months.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for Using the Funds Envisaged in the State Budget for Financial Support of Measures in the Agro-Industrial Complex by Reducing Lending” of 07.02.18, No. 254 states that in 2018 partial compensation of the interest rate on loans in the national currency will be paid to farmers who have net income from sales of goods for the last year to UAH 20 million. At the same time, preference will be given to borrowers involved in growing vegetables in open soil, sugar beets, horticulture and berry farming.

The government has also expanded the list of farmers who will qualify for compensation in the second stage. Now, the second stage will include farmers who carry out activities of cultivation and breeding animals (cattle, sheep and goats, rabbits, pigs and poultry (except for chicken and poultry eggs) and used the loan funds to cover the costs associated with such activity.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Resolutions of the Cabinet of Ministers of Ukraine dated November 3, 1998, No. 1740 and August 25, 1999, No. 1549” of 28.03.18, No. 212, established the form and procedure for the submission by notaries of reports on concluded real estate sale contracts and payment of a fee for compulsory state pension insurance.

According to the Government resolution, notaries every quarter before the 20th of the month following the reporting quarter are obliged to submit the report on concluded real estate sale contracts and payment of fee for compulsory state pension insurance according to the approved form to the authorities of the Pension Fund of Ukraine at the place of location of the state notary office or private notary office.

The form of the report contains information on the number of real estate sale contracts in each month of the reporting quarter, as well as the value of such property and the amount of the fee paid for compulsory state pension insurance.

Reports on paper carriers certified by the notary’s signature or the head of the state notary’s office and sealed, the notaries will submit in person or send by post (with a statement of delivery and description of the attachment) not later than 10 days before the deadline for submission of the report.

Also, notaries certifying real estate sale contracts must keep a copy of the payment order, which confirms the payment of the compulsory state pension insurance for real estate purchase and sale transactions.  The sum of the fee is paid by the payer at the location of the state notary office or the private notary’s place of work.

The Ministry of Agrarian Policy and Food of Ukraine by its Order “On approval the regulations under which compensation is made in wine growing, horticulture and hop growing, forms of reporting and the list of equipment, machinery and technology” of 20.03.18, No. 151 approved new norms for compensating grape growers, gardeners and hop growers, as well as forms of reporting and a list of equipment, machinery and equipment that farmers need to participate in state support programs.

Thus, there are rules under which expenses compensation is made:

• for the creation and irrigation of fruit and berry plantations, vineyards and hops without taking into account design work;
• for design work in vine growing, horticulture and hop growing;
• for construction of refrigerators with regulated gas environment and capacity of 500 tons for storage of table grapes and fruits of own production;
• for the construction of fast freezing chambers of fruits and berries;
• for purchasing lines of commodity processing of fruits.

In addition, it is updated the List of new mechanisms and techniques for carrying out technological operations in vine growing, horticulture and hop growing, equipment for sublimation drying of fruits, modernization of refrigerating and gas storage regimes in reconstructed refrigerators to be compensated.

The Ministry of Finance of Ukraine posted and made publicly debated a bill on its website aimed at introducing criteria for the identification of high-ranking individuals.

Representatives of the financial department propose to classify as category of wealthy people - taxpayers of the income tax - residents, which meet one of the criteria:

a) is the ultimate beneficial owner (controller) of a large taxpayer;

b) directly or indirectly holds 10% or more of the authorized capital or the voting rights of the acquired shares of a legal person who is a tax resident of another state and declared (received) income for the previous tax (reporting) year 10 and more million euros;

c) total annual taxable income for the previous tax (reporting) year exceeds UAH 50 million.

Also, the draft law provides that:

• the category of people with high incomes must be taken on a separate record;
• wealthy people must annually declare their wealth;
• the SFSU should have access to information on bank accounts of wealthy people;
• it is necessary to expand the amount of information on bank accounts of high-income persons, which can be received by the bodies of income and fees at the written request of the banking institution.

The Ministry of Economic Development and Trade of Ukraine by its the letter “On succession and newly created legal entities” of 23.03.18, No. 3304-04/12631-07, clarifies the rules for the conclusion and execution of a procurement contract, if the customer or participant to be reorganized, and such a legal entity is suspended.

The assignee of the customer may take actions in respect of the completion of procurement procedures initiated by a legal entity that has been terminated as a result of the reorganization or in the case of execution of a procurement contract signed by such a person. Of course, provided that the succession is executed properly.

In addition, a new legal entity formed as a result of the reorganization of the procurement participant, to which the relevant rights and obligations have been transferred, has the right to take actions to execute the procurement contract concluded by the predecessor.

The State Fiscal Service of Ukraine in its letter “On the implementation of the Law of Ukraine “On State Control over Compliance with Legislation on Food Products, Forages, By-products of Animal Origin, Health and Welfare of Animals” of 04.04.18, No. 10248/7/99-99-18-03-01-17 reported that during the customs procedures it should be guided by previously approved lists of products for the implementation of state veterinary and sanitary and sanitary and epidemiological control.

It should be recalled that today the list of goods that are subject to state control at the border for compliance with legislation on food products, forages, by-products of animal origin, health and welfare of animal is not approved.

At the same time, from 04.04.18, a new type of state control was introduced in Ukraine - state control over observance of legislation on food products, forages, and by-products of animal origin, health and welfare of animal. The list of goods subject to state control (including in the form of preliminary documentary control) in case of their movement through the customs border of Ukraine, approved by the resolution of the CMU of 05.10.11, No. 1031.

Controlled Transactions

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Resolution of the Cabinet of Ministers of Ukraine dated December 27, 2017 No. 1045” of 11.04.18, No. 295 excluded Bulgaria from the list of states transactions with which were recognized to be controlled for the purpose of transfer pricing.

However, if the company carries out transactions with residents of Bulgaria in the period from 01.01.18 until the moment when the Cabinet Resolution on its exclusion from offshore countries comes into force, such transactions will be considered as controlled. Of course, subject to the requirements of para.39.2.1.7 of TCU.

It should be recalled that on March 7, 2018, the Cabinet excluded Georgia, Estonia, Latvia, Malta and Hungary from the list of offshore countries.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On recognition of a business transaction controlled in the absence of the organizational and legal form of non-residents in the relevant list (resident of Estonia)” of 19.03.18, No. 1091/6/99-99-15-02-02-15/ІПК reported that transactions with residents of Estonia did not fall under controlled ones, even if all the cost criteria from para. 39.2.1.7 of the Tax Code of Ukraine (hereinafter – TCU) to be fulfilled.

It is worth recalling that recently the Cabinet of Ministers excluded Estonia from the list of offshore countries. Therefore, transactions with such non-residents are not considered to be controlled for the purpose of transfer pricing.

This applies to cases where the government can not be recognized as controlled by other features of para. 39.2.1.1 of TCU. For example, if such a non-resident is a related party or commissioner, or his/her organizational form is in List No. 480, transactions with him/her will still be considered controlled.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On recognition of economic transactions of agricultural producers - payers of the unified tax of the fourth group for the sale of products for export as controlled” of 21.03.18, No. 1153/6/99-99-15-02-02-15/ІПК explained: the economic transactions of the agricultural producer, made by him/her while being on the simplified taxation system, are not recognized as controllable in accordance with Art.39 of TCU.

Such a conclusion is quite logical. After all, controlled transactions are considered economic transactions that may affect the object of taxation of company income tax (para. 39.2.1.1 of TCU).

The payers of the unified tax, to which the agricultural producer belongs, who is the payer of the unified tax of the fourth group, are exempted from the obligation of accruing, payment and submitting tax returns on the company income tax (para. 297.1 of TCU).

Since the agricultural payer of the unified tax does not pay income tax, his/her transactions are not subject to transfer pricing.

Labor and Salaries

The Ministry of Health of Ukraine in its letter “On the necessity of obtaining a license for the conduct of economic activity of medical practice for carrying out medical examinations of drivers of vehicles” of 24.11.17, No. 17/19/53/1541-17/31223 clarified the following: to examine the health of drivers (i.e. conducting pre-departure and post-departure examinations of drivers) it is necessary to choose one of the following ways:

• to conclude an agreement between carriers and an outpatient clinic with a license, under which the relevant services will be provided by a separate structural unit of the outpatient clinic;
• individual-entrepreneurs conducting medical practice on the basis of a license, open medical offices at the enterprises carrying out transportation;
• enterprises carrying out transportation receive a license and open a medical cabinet without establishing a health care institution that will act in accordance with the provisions of such a cabinet.

The Ministry of Social Policy of Ukraine by its letter “On the mandatory approval of the rules of the internal labor regulations” of 21.06.17, No. 312/0/22-17/13 reported: the norms of labor legislation apply to labor relations that arise between an employee and an individual – an entrepreneur.

According to Art. 29 of the Code of Labor Laws of Ukraine (hereinafter – Labor Code) before the commencement of work under a concluded employment contract, the owner or an authorized body of the latter is obliged, in particular, to acquaint the employee with the rules of the internal labor regulations, the ministry emphasizes. This requirement also applies to entrepreneurs.

Failure by an employer, including an entrepreneur, a determined procedure for work permit of an employee is a violation of labor legislation.

It should be recalled that the employer’s liability for violation of labor legislation is established by Art.265 of Labor Code. In particular, a fine may be one minimum salary (today – UAH 3 723) for not familiarizing the employee with the rules of internal labor regulations.

The Ministry of Social Policy of Ukraine by its Order “On approval of the requirements for safety and health in the use of industrial equipment by employees” of 28.12.17, No. 2072 approved the safety and health requirements for the use of production equipment by employees.

In particular, it has been established that the employer must monitor, evaluate the technical condition of machinery, mechanisms, equipment of increased danger and supervise their safe operation in accordance with the requirements of regulatory and legal acts on occupational safety and health.

The document defines the following types of technical inspection of production equipment:

• primary,
• periodic,
• extraordinary,
• expert examination.

For each type of inspection and expert examination, cases have been identified. For example, an emergency equipment inspection is carried out by:

• after repair, modification (reconstruction or modernization) of the specified production equipment;
• after the interruption of the operation of the said production equipment for more than 12 months, if the conditions of its storage did not meet the requirements of normative legal acts on occupational safety and health.

The employer’s duty is also to provide employees with information and written instructions on safety, health and life during the operation of production equipment, which in particular must contain information on:

• conditions of use of production equipment;
• predictable non-professional situations;
• practical recommendations taking into account the experience of safe use of production equipment (if necessary).

Failure to comply with such requirements may lead to penalties for breach of labor protection laws.

The Ministry of Social Policy of Ukraine by its letter “On the Indexation of Wages” of 28.02.2018, No. 13/0/66-18 reported: the Procedure of indexation of money incomes, approved by the CMU of 17.07.03, No. 1078 (hereinafter – Procedure No. 1078) does not provide the preservation of indexing amounts, if the employee is transferred from one form of remuneration to another.

At the same time, in accordance with para.5 of the Procedure No. 1078, salary it to be increased to employees of the economic settlement companies and organizations in connection with the growth of inflation rate in the order specified in collective agreements, but not below the norms established by the Law of Ukraine “On Indexation of Monetary Income” of 03.07.91, No. 1282-XII and the provisions of the Procedure No. 1078.

Consequently, in a collective agreement the company may provide for the provisions on indexation of employees to be transferred from one form of remuneration to another.

The State Labor Service of Ukraine in its Letter “On the implementation of state control over the observance of labor legislation” of 11.01.18, No. 183/3/4.3-3В-18 reported that in the presence of violations of labor law requirements fixed by the act of an inspection visit, or an act of remote inspection,  the Labor Inspectorate analyzes the materials of the inspection, based on the results of which makes a prescription and/or takes steps to bring the guilty official to responsibility (para.27 of the Procedure for exercising state control over the observance of labor legislation, approved by the resolution of the CMU of 26.04.17, No. 295, hereinafter – Procedure No. 295). In accordance with para.28 of the Procedure No. 295, in the case of execution of prescription in the time period established therein, measures to attract the object of visit and its officials are not brought to responsibility.

That is, if the employer fulfils the requirements of the prescription, for example, in the prescribed period the employee has been credited and paid compensation for the delay in payment of wages, the Labor Inspectorate has no grounds to take measures to attract the employer and his officials to the liability stipulated in Art. 265 of the Labor Code of Ukraine.

At the same time, in case of detection of an administrative violation, the protocol should be drawn up, since cases when the protocol should not be made up are clearly defined in Art. 258 of the Code of Ukraine on Administrative Offenses.

Also, the State Labor Office draws attention to the fact that, in accordance with para.29 of the Procedure No. 295, measures are taken to attract employers and their officials to liability for:

• use of work of unregistered workers;
• untimely and not full salary payment;
• non-compliance with minimum wage guarantees
• are used simultaneously with the introduction of the prescription, regardless of the fact of elimination of the revealed violations, during the inspection visit or remote inspection.

Court Rulings

The Supreme Court of Ukraine by its decision of 30.03.18, in the case No. 812/292/18 (Proceedings No. Пз/9901/22/18) ruled that taxpayers located and registered in the tax authorities in the ATO zone can not be applied penalties and penalties for untimely payment of the unified contribution.

In its decision, the board of judges of the SCU states that there are grounds for suspending or not applying sanctions. In this way, it called the stay of the payers of the unified contribution at the time of making a decision on registration in the revenue and fee bodies located in the territory of settlements, where ATO to be conducted.

The court also pointed out circumstances that may affect another application of substantive law than in the exemplary case:

• the presence of a payer of the unified contribution registered in the ATO zone is registered in the tax authorities located outside such territory;
• failure by the payer of the unified contribution of his/her duties that arose before and/or after the end of the ATO.

Financial Markets

The National Bank of Ukraine in its letter “On the clarification of whether the business entities should reflect in the cash book the funds of the provided financial assistance, increase of the authorized capital, etc., made by one of the founders or an official of the entity on the settlement account of the enterprise through the cash desk of the bank” of 07.02.18, No. 50-0007/7855 clarified that the cash limit of UAH 50 000 applied to cash payments between the individual and the company, including for financial assistance, increase of the authorized capital.

Consequently, if the amount of financial aid or contribution to replenish the authorized capital exceeds UAH 50 000, then individuals (for example, one of the founders or the director or chief accountant of the company) can use for calculating the services of banks by making cash and transferring them further to the accounts of the recipients (in this case, on the current accounts of the entity). Such funds should not be reflected in the cash book of the company, since they were received on a current account in a non-cash order.

It should be reminded that individuals have the right to make cash settlements within one day with one or more payment documents with business entities in the amount of up to 50 000 hryvnias (paras.6 and 7 of the II Regulation on cash transactions in national currency in Ukraine, approved by the decision of the NBU Board dated December 29, 17, No. 148).

The Other Things

The Ministry of Foreign Affairs of Ukraine on its website reported that Ukrainian consular offices began to issue electronic visas to foreign tourists and businessmen.

The simplification of the process of processing Ukrainian visas will strengthen the tourism and transport business. In addition, it will be easier to establish business ties.

In order to claim for e-visa processing it is necessary fill in the online application form, download the scanned copies of the required documents, pay on the website with a bank card and print out the electronic visa received on the e-mail address.

Visa processing terms are shortened to 9 business days.

An electronic visa will be only one time, and stay in the territory of Ukraine can be up to 30 days.

E-visas have been introduced for citizens of the following countries: Australia, Antigua and Barbuda, Bahamas, Barbados, Bahrain, Bolivia, Bhutan, Vanuatu, Haiti, Guatemala, Honduras, Grenada, Dominica, Dominican Republic, Indonesia, Cambodia, Qatar, Costa Rica, Kuwait, Laos, Mauritius, Malaysia, Maldives, Mexico, Micronesia, Myanmar, Nepal, Nicaragua, New Zealand, Oman, Palau, Peru, El Salvador, Samoa, Saudi Arabia, Seychelles, Saint Vincent and the Grenadines, Saint Lucia, Singapore, Suriname, Thailand, Timor-Leste, Trinidad and Tobago, Tuvalu, Fiji, Jamaica.

The Cabinet of Ministers of Ukraine by its Resolution “On approval of the list of buildings for industrial and agricultural purposes, energy facilities, transport, communications and defence, warehouses, which are not subject to minimum requirements for energy efficiency of buildings and which are not subject to certification of energy efficiency of buildings” 11.04.18, No. 265 approved the list of buildings for industrial and agricultural purposes, energy facilities, transport, communications and defence, warehouses, which are not subject to minimum energy efficiency requirements for buildings and which are not subject to certification of energy efficiency of buildings.

These buildings, in particular, include historic buildings, bus and railway stations, buildings of enterprises of mechanical engineering and metalworking, ferrous metallurgy, chemical, petrochemical, light industry, food industry, forestry enterprises, woodworking and pulp and paper industry, buildings of construction industry enterprises, etc.

It should be reminded that an energy certificate is an electronic document, which specifies indicators and a class of energy efficiency of a building, gives recommendations for its increase, as well as other information about the building, its separate parts, the energy efficiency of which is certified.