Legislation overview (July 2018)

Taxes

VAT

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Value Added Tax” of 23.07.2018, No. 3228/6/99-99-15-03-02-15/ІПК reported that VAT payers when certain transactions to be obliged to use the cash-basis method of VAT accounting. Under this method, the tax liabilities and the VAT credit are recognized on the date of receipt/transfer of payment for goods/services.

At the same time, quite often there are questions about to what exact transactions of utility providers the cash-basis method of VAT accounting applies?

The VAT payer, who carries out the supply of goods/services specified in paras. 187.10 and 44 of sub-section 2 of sec. XX of TCU, determines the date of occurrence of tax liabilities and tax credit on VAT under the cash-basis method exclusively for such transactions. Under transactions not provided for in spar.187.10 and para. 44 of sub-section 2 of sec. XX of TCU, the VAT payer should apply the general rules for determining the date of the occurrence of tax liabilities and the formation of a tax credit set in paras. 187.1 and 198.2 of TCU.

Services for the installation of a commercial accounting unit for thermal energy and water supply, as well as its maintenance and replacement, are not included in the list of services specified in para. 187.10 and para. 44 of subsection 2 of sec. XX of TCU. In addition, fees for such services are not included in the rent or housing maintenance fees. Therefore, under the provision of these services, the VAT payer determines the date of the occurrence of tax liabilities in accordance with the general rules set in para.187.1 of TCU.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the procedure of VAT taxation of funds received in the form of compensation for payment of the land tax” of 16.07.2018, No. 3126/6/99-99-15-03-02-15/ ІПК reported that in the rent part, the lessee had to compensate all elements of the costs associated with the provision of the property to the lease, including the land tax.

If the lessor is a budgetary institution, the reimbursement of expenses for the maintenance of the leased real estate, utilities and energy is not included in the VAT base. If the lessor is a different person - the VAT payer, the reimbursement of any costs is included in the VAT base.

The reimbursement of land tax and other costs by its nature is an integral part of the cost of a property lease. Therefore, such amounts are subject to VAT, they are included in the tax base of VAT for the relevant reporting period.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the procedure for VAT taxation” of 11.07.2018, No. 3062/6/99-99-15-03-02-15/ІПК reported that transactions on the supply of services for the international carriage of passengers, luggage and cargo by rail, road, sea, river and aviation to be taxed by a zero VAT rate. Transportation is considered to be international if it is carried out under the unified international transport document. Such a document can be:

• Air Waybill
• CMR
• Waybill of Agreement on International Goods Transport by Rail
• Bill of Lading
• CIM invoice
• Cargo Manifest
• other documents specified by the laws of Ukraine.

The zero VAT rate is applied to international cargo transportation operations along the whole route of cargo transportation in general without dividing it into segments within the customs territory of Ukraine and beyond. But it is not necessary to divide the route, only if the carriage is carried out under the unified international transport document.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On VAT Taxation” of 27.06.2018, No. 2877/5/99-99-15-03-02-16/ІПК reports: if goods/services, non-current assets are assigned for their use or begin to be used in non-objective, exempt from VAT and non-performing transactions (transactions specified in subparagraphs “a” – “г”, para. 198.5 of TCU), the VAT payer is obliged to calculate compensating VAT obligations in accordance with para. 198.5 of TCU. For this purpose, it is necessary to prepare and register a consolidated tax invoice in the Unified Register of Tax Invoices (hereinafter – URTI).

The tax base should be determined in accordance with para. 189.1 of the TCU.

The accrual of such VAT obligations is made on condition that the purchase of such goods/services, non-current assets was carried out with VAT, and for goods/services, non-current assets acquired or manufactured before July 1, 2015 – if, during such purchasing or manufacturing of the tax amount to be included in the tax credit.

It should be noted that the rules of para.198.5 of TCU became suchlike as of 01.01.2018.

At the same time, tax liabilities in accordance with para. 198.5 of TCU are calculated:

• for goods/services, non-current assets purchased after July 1, 2015, intended for use in non-taxable transactions, - in the reporting (tax) period in which the supplier of such goods/services, non-current assets registered the corresponding tax invoice in the URTI, i.e. in the reporting period in which the buyer of such goods/services found grounds for including the sums of VAT paid upon their purchase into a tax credit;
• for goods/services, non-current assets acquired or manufactured before 01.07.2015, which begin to be used in non-taxable transactions after July 1, 2015 - if the VAT amounts accrued (paid) during their purchasing or manufacturing to be included in the tax credit, and to be not accrued, if the VAT amounts to be not included in the tax credit.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On VAT Taxation” of 25.06.2018, No.2821/6/99-99-15-03-02-15/ІПК reported that upon import of goods into the customs territory of Ukraine, the right to the tax credit for such a transaction arises only at the customer at the date of payment of VAT liabilities in accordance with para.187.1 of the TCU on the basis of a customs declaration, drawn up in accordance with the requirements of the legislation.

Tax liabilities on commissions, the commissioner has in accordance with para. 187.1 of the TCU in the general order in accordance with the rule of the first event:

• or by the date of receipt of the remuneration from the customer on the current account;
• or by the date of signing the act of the services provided.

At the same time, the VAT base is determined in accordance with the requirements of para.188.1 of the TCU.

Consequently, if, in accordance with the commission agreement, the commission agent at the expense of the commissioner purchases goods from a non-resident and, at the time of customs clearance, pays the VAT to the budget, then the right to assign the amount of VAT to a tax credit has only the owner of such goods - the customer on the basis of the customs declaration, in which it should be indicated as the recipient (owner) of the goods.

Corporate Income Tax

The Verkhovna Rada of Ukraine posted a draft law on its website according to which the income tax will be replaced by the exit capital tax. The document clearly states that the abolition of the income tax and the introduction of the exit capital tax will take place on 01.01.19.

The subject to the new tax are the transactions on capital exit and transactions that are equated with capital exit transactions.

It should be explained that exit capital transactions are, in particular, the payment of dividends in favor of a non-resident or a unified tax payer, payment of part of the profits to state-owned enterprises, the return of contributions to the owner of corporate rights - non-taxpayer (in the amount exceeding the cost of the contribution made by the founder and / or the owner before the authorized capital of such legal entity), etc.

Tax rates – 15%, 20%, 5%.

By December 31, 2018, lawmakers plan to create a Register of Taxpayers for the exit capital tax, to which the payers of the company income tax registered in the controlling authorities as of 01.12.18 are included.

Unified Tax

The State Fiscal Service of Ukraine in its letter “On clarification of certain norms of legislation” of 06.06.2018, No. 19467-16/99-99-13-01-01-15 reported that in accordance with para. 299.10 of Art. 299 of the Tax Code of Ukraine (hereinafter – TCU), the registration as the unified tax payer is permanent and can be canceled by way of exclusion from the register of the unified tax payers by the decision of the controlling authority in the case of:

• submission by the taxpayer of the application for the refusal of the application of the simplified taxation system in connection with the transfer to payment of other taxes and fees determined by the TCU - on the last day of the calendar quarter in which such application is submitted;
• termination of entrepreneurial activity by an individual entrepreneur in accordance with the law - on the day of receipt by the relevant controlling authority from the state registrar of the notification of the state registration of such termination;
• in the cases specified in paras. 298.2.3 of para. 298.2 of Art. 298 of TCU.

Provided that the relevant control authority identified during the inspections of violations by the unified tax payer of the first - third groups of requirements established in Chap. 1 of sec. XIV “Special tax regimes’ of the TCU, cancellation of registration of the payer of the unified tax of the first to the third group is made by the decision of such a body, adopted on the basis of the act of verification, from the first day of the month following the quarter in which the violation was committed. In this case, the business entity has the right to choose or to move to the simplified taxation system after the end of four consecutive quarters from the moment the decision was made by the controlling authority (para. 299.11 of Art. 299 of TCU).

The TCU norms do not provide for the establishment of a certain form of decision to cancel the registration of the unified tax payer. Such a decision is given to the taxpayer in writing, signed by the head of the supervising authority, with mandatory indication of the grounds for canceling the registration of the unified tax payer.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Rates of the Unified Tax” of 26.06.2018, No. 2860/6/99-99-12-02-03-15/ІПК reported: if the unified tax payer decided to change the rate of the unified tax from 5% for 3%, he/she should submit not later than 15 calendar days before the beginning of the calendar quarter:

• registration statement of the VAT payer;
• statement on the application of the simplified taxation system, in which to indicate the change in the rate of the unified tax.

Then the 3% rate can be applied from the beginning of the quarter following the quarter in which the taxpayer applied for a change in the unified tax rate.

PIT and the War Tax

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Taxation of the Aid Received by the Individual for Treatment” of 10.07.2018, No. 3055/6/99-99-13-02-03-15/ ІПК reminded that the total monthly (year) taxable income of the taxpayer does not include the funds or value of the property (services) provided as aid for the treatment and medical care of the taxpayer, subject to documentary confirmation of the costs associated with the provision of the said assistance (in case of funds provision) (para. 165.1.19 of TCU).

At the same time, representatives of the fiscal department noted that the funds provided by a legal entity (employer) to an individual (employee) as a treatment for treatment abroad are not subject to PIT and the war tax upon condition that documentary confirmation of the costs associated with the provision of the specified assistance.

These documents include, but are not limited to: the presence and characteristics of the illness, the pathological state of the taxpayer, service documents identifying the provider and the taxpayer to whom such services are provided, the volume and value of such services: contracts, payment and settlement documents, service delivery acts, other relevant documents depending on the treatment required, the illness and its condition.

Other taxes and fees

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Resolution of the Cabinet of Ministers of Ukraine dated February 16, 2011 No. 106” of 11.07.2018, No. 543 introduced amendments to the Resolution of the CMU of 16.02.2011, No. 106. The amendments stipulate that the State Fiscal Service of Ukraine will control the levy:

• rent for the use of mineral deposits for oil production accrued before 01.01.2018, repayment of tax debt and the return of mistakenly or excessively paid amounts up to 31.12.2017;
• rent for the use of mineral resources for the extraction of natural gas accrued before 01.01.2018; repayment of the tax debt and the return of the mistakenly or excessively paid amounts up to 31.12.2017;
• rent for the use of mineral resources for the extraction of gas condensate accrued before 01.01.2018, repayment of tax debt and the return of mistakenly or excessively paid amounts up to 31.12.2017.

In this case, the SFSU will not control the payment of accrued by the act of verification:

• dividends (income) accrued on shares of economic partnerships, the authorized capital of which is the property of the Autonomous Republic of Crimea, communal property;
• rent for water objects (parts thereof) provided for the use on lease terms by the Council of Ministers of the Autonomous Republic of Crimea, regional, district, Kyiv and Sevastopol cities state administrations, and local councils;
• concession payments for communal property objects.

The Ministry of Finance of Ukraine by its Order “On approval of general tax consultations on certain issues of taxation of land” of 06.07.18, No. 602, approved three general tax advices:

• on the collection of the fee for land in the event of lease of an area in an apartment building;
• on payment of the land tax by the owner of real estate located on a land plot, the rights to which are not registered for such person;
• regarding the collection of the land tax from individual - entrepreneurs – the unified tax payers.

The State Fiscal Service of Ukraine on the publicly available information resource “ZIR” (category 112.01) reports that the owner of real estate in an apartment building, along with other co-owners, should bear the costs of maintaining the building in proportion to own share of the property, which may also include a statutory fee for land on a land plot under such a building and adjacent territory.

At the same time, the direct payer of the payment for the land is a person in respect of which the registration of state rights to the land plot under the house and the adjacent territory (institution or organization that manages the apartment building of state or communal property; the association of co-owners of an apartment building that is the subject of registration in accordance with the decision of the co-owners).

In its turn, the tenant in both the residential and non-residential premises in the apartment building does not directly acquire ownership rights or use of land plots that would be subject to the state registration under such a lessee in accordance with the legislation.

Therefore, there are no grounds for accruing and payment for land (in the form of a land tax or rent for state or communal land) as a taxpayer.

Accounting and Reporting

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for Financial Reporting” of 11.07.2018, No. 547, amended the Procedure for Financial Reporting, approved by the Resolution of the Cabinet of Ministers of Ukraine of 28.02.2000, No. 419. The document is brought into compliance with the Law of Ukraine “On Amendments to the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” regarding the improvement of certain provisions” of 05.10.2017, No. 2164-VIII (hereinafter – Law).

The resolution provides for:

• supplementing the list of enterprises that prepare financial reporting according to international financial reporting standards;
• submission of financial reporting, prepared under IFRS, based on taxonomy in the unified electronic format;
• submission of the report by separate categories of enterprises together with the financial statements on the management and the report on payments in favor of the state;
• disclosure of financial reporting in accordance with the requirements established by the Law;
• presentation of consolidated financial reporting.

This resolution enters into force from the day of its publication, except for par. 8 of sub-para. 1 of the amendments approved by this resolution, which comes into force on January 1, 2019.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the concept of “the moment of introduction of cash registers into service” of 06.07.2018, No. 3000/6/99-99-14-05-01-15/ІПК reports: the date of introduction of cash registers into service is the relevant date specified in the passport (form) of the cash register, the act of introduction of the cash register into service, and from which the warranty period of the cash register is calculated. Such a date should be entered into the information system of the SFSU at the initial registration of the cash register and from this date the service life of the cash register should be calculated.

Representatives of the fiscal department refer to para. 13 of the Procedure for maintenance and repair of cash registers, approved by the CMU Resolution No. 601 of 12.05.2004 (hereinafter – Procedure No. 601), which, upon completion of work on the introduction of cash register into service, a representative of the service center makes a record in the operational documents, makes a statement on the sealing of the cash register and the act of putting it into operation.

The operational documents include the passport (form) of the cash register, which must have separate sections for entering data on the introduction of the registrar into operation and its warranty (post-warranty) repair (paras. 7, 8 of Procedure No. 601).  In this case, the warranty period for the use of the cash register is calculated from the date of its introduction into service (para. 18 of the Procedure No. 601).

The State Statistics Service of Ukraine by its Order “On Approval of Forms of State Statistical Monitoring No. 1-опт (monthly) “Report on the volume of wholesale trade turnover” and No. 1-опт (quarterly) “Report on sales and stocks of goods (products) in wholesale trade” of 13 July 2018, No. 149 approved forms of state statistical monitoring:

• No. 1- опт (monthly) “Report on the volume of wholesale trade turnover” - starting with the report for January 2019;
• No. 1- опт (quarterly) “Report on sales and stocks of goods (products) in wholesale trade” - starting with the report for the first quarter of 2019.

The forms of state statistical monitoring approved by this order, apply to legal entities.

The Order of the State Statistics Committee “On approval of forms of state statistical monitoring No. 1-торг (monthly) “Report on trade turnover of the trading network” and No. 3-торг (quarterly) “Report on sales and stocks of goods in the trading network” of July 16, 2018, No. 153 also approved forms of state statistical monitoring:

• No. 1-торг (monthly) “Report on trade turnover of the trading network” starting from the report for January 2019;
• No. 3-торг (quarterly) “Report on sales and stocks of goods in the trading network” – starting from the report for the first quarter of 2019.

The mentioned forms apply to legal entities.

In addition, the Order “On approval of the form of state statistical monitoring No. 1-торг (petroleum products) (monthly) “On the sale of light petroleum products and gas” of July 16, 2018, No. 154 has approved the form of state statistical monitoring No. 1-торг (petroleum products) (monthly) ‘On the sale of light petroleum products and gas”, which will be put into effect starting from the report for January 2019 and apply to legal entities and individual entrepreneurs.

Control and Responsibility

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Procedure for Voluntary Insurance of Responsibility of Heads and Members of the Supervisory Councils of State Unitary Enterprises and Economic Associations in the authorized capital of which more than 50 percent of shares belong to the state” approved the procedure for voluntary insurance of liability of heads of state enterprises.

According to the Resolution, the decision on the conclusion of the insurance contract is taken by the management entity of the objects of state property, the sphere of management of which belongs to the company, and the general meeting of the company.

Among the insurance risks to be reimbursed are:

• investment activity that led to losses of the enterprise;
• comments and statements by company managers that negatively affected the business reputation of the enterprise and led to its losses;
• disclosure of official and confidential information and commercial secrets, which caused the enterprise to be damaged;
• conclusion of agreements, including those in which directors or members of the supervisory boards have personal interest that resulted in losses;
• causing damages to the enterprise during the procedures for its reorganization or liquidation;
• disclosure of false financial statements of the enterprise that led to its losses.

The State Fiscal Service of Ukraine on the publicly available information resource “ZIR” (category 138.01) reports that taxpayer (tax agent and/or his official) cannot be prosecuted, including financial (penalties sanctions and/or fines), which acted in accordance with the individual tax advice (hereinafter – ITA) provided to him in writing, as well as a general tax advice (hereinafter – GTA), for an act that contains elements of a tax offense, in particular on the grounds that further such tax advice has been changed or canceled (sub-para. 1 of para. 53.1 of the Tax Code of Ukraine, hereinafter - TCU).

Provisions of sub-para. 1 of para. 53.1 of TCU is applied to the ITA, provided that it is registered in the unified database of the individual tax advice.

If the provisions of the ITA conflict with the provisions of the GTA, the provisions of GTA are to be applied.

The taxpayer and/or the tax agent acting in accordance with the tax advice are not exempted from the obligation to pay the tax liability specified in the TCU.

The Ministry of Finance of Ukraine by its Order “On Approval of the Amendments to the Procedure for Presentation of Results of Documentary Verification for Compliance with the Legislation of Ukraine on the Issues of State Customs, Tax, Currency and Other Legislation by Taxpayers – Legal Entities and their Separate Divisions” of 05.06.2018, No. 547 approved amendments to Procedure for registration of the results of documentary verification of compliance with the legislation of Ukraine on issues of state customs, tax, currency and other legislation by taxpayers - legal entities and their separate subdivisions, approved by the order of the Ministry of Finance of 20.08.2015, No. 727.

The amendments provide for that in case of disagreement of the taxpayer with the conclusions of the documentary verification, except objections, the additional documents can be submitted, which are considered by the controlling authority.

One copy of the act (certificate) of the documentary verification and other verification materials should be kept in the supervising authority that carried out the verification.

The period of storage of acts (certificates) and other materials of documentary verification in the supervisory authorities is five years (in the case of appeal of the results of the verification, the term increases (if necessary).

The State Treasury Service of Ukraine reported that in order to avoid budget losses, in connection with the change of accounts, a transitional period was established, at which time the old accounts for transferring incomes to the state and local budgets remain relevant.

All taxes and fees transferred to the old account are not lost, are not returned, do not require additional redirection efforts, and are credited to the designated purpose and in accordance with the budget law.

By the time of the transition period - until September 11, 2018, the execution of transactions in both old and new accounts is carried out in regular mode.

The fiscal authorities added that until September 10, 2018, two sets of accounts remain active for the enrollment of taxes, fees, and payments, that is, both the old ones that were in effect before 02.07.2018 and the new ones that were in effect from 02.07.2018.

The given model will allow to keep personalized data on the payment of taxes, fees, payments to payers both on the accounts that existed before 02.07.2018 and on the accounts valid from 02.07.2018.

At the same time, the accounts for payment of the USC have not changed from 02.07.18.

Labor and Salaries

The Ministry of Social Policy of Ukraine in its letter “On the average wages not taken into account for wages to ensure its minimum level dated 18.06.2018, No. 1056/0/101-18 reported that according to Art. 119 of the Code of Labor Law (hereinafter - Labor Code) for an employee who has been admitted to military service (term, mobilization, contract) until the end of a special period or before the day of actual dismissal, the place of employment, position and average earnings are preserved.

At the same time the average amount of earnings, which are preserved for the mentioned above employees, are not the salary of the employee, which the employer pays to him for the work performed - these are payments that are calculated in accordance with the provisions of the Procedure for calculating the average salary, approved by the CMU Decree of 08.02.95, No. 100 (hereinafter – the Procedure).

Amounts of average earnings are not included in the salary to ensure its minimum level.

At the same time, paragraph 10 of the Procedure stipulates that in case of raising tariff rates and salaries in accordance with legislative acts, as well as by decisions provided for in collective agreements, both in the accounting period and in the period during which the employee retains the average earnings, wages, including bonuses and other payments, which are taken into account when calculating the average wage, are adjusted to the increase rate during the period of time upward.

In cases when the increase of tariff rates and salaries occurred in the period during which the average earnings to be kept under the employee (including those employees who were called for a regular military service, military service on the call for mobilization, for a special period or taken to military service under a contract), according to this earning, accrual is made only in part relating to the days of maintaining the average wage on the day the tariff rates (salaries) increase.

The State Labor Service of Ukraine in its letter “On the decision making on the imposing penal sanctions in case of independent removal by the employer of the violation of labor legislation” of 07.05.2018, No. 3571/4.1/4.1-ДП-11 reported that in case of independent removal by the employer prior to the inspection visit violation of the legislation on the payment of compensation for all days of unused leave on the day of dismissal in accordance with the requirements of Article 117 of the Labor Code of Ukraine, this fact would be taken into account by the authorized person when deciding on the consideration of case on penalties imposition.

It should be recalled that in accordance with Article 83 of the Labor Code of Ukraine (hereinafter – Labor Code), in the event of the dismissal of an employee, he/she to be paid monetary compensation for all unused days of his/her annual leave, as well as additional leave for workers with children or an adult child with disabilities from the childhood of a subgroup A of Group I.

Article 116 of the Labor Code provides that, upon dismissal of an employee, payment of all sums belonging to him/her from the company, institution or organization should be carried out on the day of dismissal.

Failure to comply with the minimum state guarantees for remuneration in accordance with the paragraph of the fourth part of Article 265 of the Labor Code entails the imposition of a fine on a legal entity and an individual – entrepreneur, who uses hired labor, in tenfold of the minimum wage established by law at the time of the detection of the violation, for each the employee for whom the violation was committed.

At the same time, the State Labor Service stresses that the letters of the ministries, other central executive bodies are not normative legal acts, they are only informational and do not establish legal norms.

The Social Insurance Fund of Ukraine (SIF) by its Resolution “On Approval of the Procedure for Financing Insurers for the Provision of Material Security to Insured Persons in Connection with the Temporary Disability and Some Payments to Victims of Work at the Expense of the Funds of the Social Insurance Fund of Ukraine” of July 19, 2018, No. 12 approved the Procedure for financing insurers for providing material security to insured persons in connection with temporary disability and individual payments to victims at work at the expense of the Social Insurance Fund of Ukraine.

In addition to leave allowances, maternity benefits and burial assistance, the new Procedure applies to:

• temporary incapacity benefit resulting from an accident at work or occupational disease;
• payments in the case of a temporary transfer of the victim to an easier lower paid work;
• reimbursement of the cost of burial of the victim and related ritual services.

In addition, the application- calculation form has been updated and it is foreseen the possibility to submit it electronically. In the case of electronic submission of a printed statement, the calculation together with the documents provided by the insured, on the basis of which the individual payments and material security were allocated, should be kept with the insured.

The SIF working authorities will check the application-calculation form after it is received.

After the payments are made, the insurer sends a notice of payment. It can be sent electronically, or by a letter of delivery, or submitted directly to the working authority of the SIF. The message must be sent within a month from the date of payment. If the insurer does not provide insured information about the payments to insured persons within three months from the date of financing, the SIF conducts a check on the use of funds by the insured.

The form of application-calculation was also changed. It will include 5 applications that detail the following information:

• material security;
• burial aid;
• accrual of leave allowances due to an accident or occupational disease;
• payment of benefits in case of a victim’s transfer to an easier lower paid job;
• compensation of the victim’s burial and related ritual services.

The new procedure comes into force on October 1, 2018.

Court Rulings

The Supreme Court of Ukraine in its Resolution of 20 June 2018, in the case No. 323/1252/17 concluded that the employees who were contracted to military service, during the special period until the end of their term or before the day of actual dismissal, retained the place work and wages.

The Supreme Court, as part of the chamber of judges of the First Judicial Chamber of the Court of Cassation, has explained that the admission to military service under a contract during a special period is not a ground for dismissal, since the employee is subject to safeguards regarding the preservation of the workplace.

The court restored the contractor at his/her work, since he/she could not be dismissed while he/she was serving in the Armed Forces.

It is explained that according to Part 3 of Article 119 of the Labor Code of Ukraine (hereinafter – Labor Code), the distribution of guarantees for the preservation of the place of work does not require the legislator to depend on the type of contract. Only provided that such guarantees are provided to a person in the event of a crisis situation that threatens national security, namely: during mobilization, for a special period.

The President of Ukraine did not make decisions on the complete demobilization of all those called up for mobilization of servicemen and the transfer of all institutions of Ukraine to the operation in peacetime.

The Supreme Court of Ukraine considered a lawsuit filed by the individual-entrepreneur, which was subject to a fine for non-recognition of cash in the Book of Income and Expenditures of the general system specialist.

From the previously expressed legal positions in the Resolutions of 01.04.2014, No. 21-54а14 and from 28.02.2018 in the case No. 824/2588/13-a, it follows that in the case of cash payments with the use of the cash registers, the cash recognition is:

• a set of actions for fixing the full amount of actual cash receipts in the fiscal reporting receipts of the cash registers (data of the accounting book)
• reflection of the cash in the accounting book of payment transaction on their basis.

Non-reflection of cash in the accounting book of payment transactions with the use of cash registers is a violation of the order of cash distribution, liability established by the Decree of the President of Ukraine “On the application of penalties for violation of norms on the regulation of cash turnover” of 12.06.1995, No. 436/95.

However, the proper, timely and complete fixing of cash in fiscal reporting receipts of the cash registers and reflection them on the cash basis at the accounting book of payment transactions was secured by the entrepreneur. In view of this, the SCU does not see grounds for imposing penalties for non-recognition, since the violation of maintaining the Accounting and Income Accounting Act does not give rise to impose a fine. This is stated in the resolution dated May 24, 2018, No. 803/1038/17.

Currency Transactions

The President of Ukraine signed the Law of Ukraine “On Currency and Exchange Transactions”.

This legal act liberalizes exchange transactions in Ukraine, and they can be practically unrestricted.

The key innovations of the law are as follows:

• Ukrainians will be able to invest abroad without obtaining individual exchange licenses;
• the law will allow to remove of excessive foreign exchange controls from minor transactions both for the population and for business;
• the law provides significant benefits to exporters and importers.

Despite the fact that there are no prohibitive measures in the law, this does not mean that they will not exist at all. If necessary, the National Bank will be able to set its own limits if it detects risks in the currency market.

The new law will become the only legislative act that determines the procedure for the organization of currency regulation and the implementation of foreign exchange supervision in the country.

The National Bank of Ukraine by its letter “On the declaration of currency values, revenues and property belonging to a resident of Ukraine and located outside its borders” 12.07.2018, No. 40-0006/38073 clarified the situation with currency declarations. According to the NBU, the sequence of filing by business entities of a declaration on currency values, as evidenced by a letter from the NBU dated April 17, 2003 No. 28-311/1929-2823 and State Tax Administration of Ukraine No. 3368/5/23-5316, is not applicable now. At present, the declaration is made separately in the SFS and in the NBU.

Business entities may send a declaration in a hard form to the NBU by mail or in person (the list of addresses is given in the letter).

It is not required from the territorial authorities to make stamps on the declarations submitted to the NBU.

In addition, the NBU directs attention that the Law of Ukraine dated June 21, 2018, No. 2473-VIII “On Currency and Currency Transactions”, which comes into force on February 7, 2019, does not stipulate for currency declarations.

Financial Markets

The National Bank of Ukraine by its Resolution “On Amendments to Certain Legislative Acts of the National Bank of Ukraine” of July 24, 2018, No. 86 introduced a series of amendments to regulatory acts that extend the ability of banks to exchange information on currency transactions of clients, as well as improve individual requirements for trading in foreign currency.

Firstly, the issue of the exchange of information about client’s foreign exchange transactions between authorized banks and liquidators of banks or legal entities formed as a result of liquidation of the bank by the owner’s decision is necessary in the event of a client’s transition to a new serving bank and the presence of unfinished transactions in it. The exchange of information about the client’s incomplete settlements will be carried out on a paper carrier solely by a communication by courier, a special connection, a postal connection (recommended or a valuable letter). Today, this exchange is carried out only by e-mail of the National Bank of Ukraine.

At the same time, banks are under an obligation to properly verify the accuracy of the information received.

Secondly, the banks will be able to buy foreign currency at the expense of customers for exchange for another foreign currency required to fulfill their obligations under foreign economic agreements on the interbank foreign exchange market and/or on the international foreign exchange market, whereas an exchange transaction for another foreign the currency was carried out exclusively on the international currency market.

In addition, the wording of the norm regulating the implementation by authorized banks of the sale and purchase of foreign currency for hryvnia on the conditions of “forward” is specified. The clarification clearly stipulates that banks can carry out such transactions with resident clients that are subjects of foreign economic activity, and / or with other authorized banks.

The mentioned above changes will enable clients who were previously served in banks that are currently being liquidated/which liquidation procedure has been already completed, and in this connection the necessary information was not provided by e-mail of the National Bank of Ukraine, purchased and/or transferred to foreign currency, and the new service banks – to exercise effective control over the currency transactions of the client. Also, these changes will enhance the efficiency of foreign exchange trading transactions.

The Resolution came into force on July 27, 2018.

The National Bank of Ukraine adopted the Resolution “On Amendments to the Resolution of the Board of the National Bank of Ukraine dated October 1, 2015 No. 654” of July 3, 2018, No. 73, which allowed persons sanctioned to carry out obligatory financial transactions within the state.

The resolution adopted by the NBU brought its requirements in line with the decision of the National Security and Defense Council of Ukraine (NSDC) “On the Application and Amendment of Personal Special Economic and Other Restrictive Measures (Sanctions)”, enacted by the Decree of the President of Ukraine of 21.06.2018, No. 176/2018. In particular, in pursuance of paragraph 4 of this decision, the National Bank extended the mechanism for the implementation of sanctions applied by the NSDC by banks, non-banking institutions, the national postal operator, and payment institutions.

Also, the National Bank allowed the persons sanctioned “to prevent the capital exit outside Ukraine”, to fulfill their obligations to Ukrainian counterparties, and also to make mandatory payments to the budget, payment of wages, etc.

The Other Things

The European Parliament approved the new European Travel Information and Authorization System (ETIAS), which is to be introduced in 2021. The decision should be formally approved by the Council of Ministers and published in the EU Official Journal.

Citizens of more than 60 countries and territories exempted from visa requirements for entry into the EU will have to fill in an electronic form with their personal data (including name, date and place of birth, sex and citizenship), information on entry documents (validity, country of issue), home address and contact information, as well as indicate the country of first entry.

The applicant will also inform the authorities of the convictions for serious crimes (terrorism, sexual exploitation of children, trafficking in human beings or drugs, murder and rape), stay in zones of war or conflict, and any administrative decisions according to which the applicant should leave the country, over the past 10 years.

In the case of terrorist crimes, the period will be extended to the previous 20 years, and additional clarifications will be needed on the date and country of conviction.

The permit will cost 7 euros, and for travelers under the age of 18 and over 70 years old - free of charge and will operate for three years or until the expiration of the validity of the travel document.

Each request will be automatically checked for the compliance with the information entered into all existing databases. The vast majority of applicants will receive permission almost immediately.