Legislation Overview (January 2018)

Taxes

VAT

The State Fiscal Service of Ukraine in its individual tax advice “On the consideration of the amount of VAT on the tax notice-decision, which denied the provision of state compensation” of 28.12.17, No. 3193/6/99-99-12-02-01-15/ІПК explained: if the results of the inspections reveal the lack of a right to receive budgetary compensation by the VAT payer, then the relevant structural unit of the controlling authority forms a tax notice-decision in the form of ВЗ.

It is important that such a sum can be taken into account by the VAT payer with the “+” sign in line 16.3 of the tax return for the reporting (tax) period, which is the date of the agreement of such tax notification decision. In addition, it is necessary to fill in a special line, which specifies the date, the number of the tax notice-decision and the corresponding indicator.

The tax amount, on which the taxpayer has the right to register tax invoices in the Unified Register of Tax Invoices under para. 200¹.3 of TCU, is increased by the amount of the reduction of the application for compensation in accordance with the notification decision in the form of ВЗ, which denied the provision of a budgetary compensation.

The State Fiscal Service of Ukraine in its individual tax advice “On taxation of transactions for warranty maintenance of agricultural machinery” of 29.12.17, No. 3203/6/99-99-15-02-02-15/ІПК clarified the tax consequences of business transactions for free of charge carrying out of the warranty repair of agricultural machinery.

It is everything simple with the income tax: there is no need to make any adjustments. After all, para.III of the TCU does not include tax differences regarding the warranty maintenance of equipment. Such transactions will affect the object of taxation of the income tax solely by the rules of accounting.

If we talk about VAT, then it is a slightly different situation. If the cost of the materials (goods) used during the warranty repair is not included in the value of other taxable transactions, then the warranty replacement is considered as a separate transaction and taxed in the general order.

Consequently, the taxpayer must make and register two tax invoices: one for the actual delivery price, the second for the amount calculated in view of the limitations of para. 188.1.

The State Fiscal Service of Ukraine in its individual tax advice “On the possibility of making an adjustment calculation by a branch (structural subdivision) to the tax invoice made by the parent company (VAT payer)” of 12.01.18, No. 122/6/99-99-15-03-02-15/ІПК explained to the payers of value added tax (hereinafter − VAT) how to adjust tax liabilities if the tax invoice for the supply of goods/services was made by the parent company, indicating in the appropriate column its tax number.

In this case, the calculation of the adjustment should be made solely by the direct supplier, as defined in the civil law contract, that is, the parent company.

It should be recalled that if the branches not registered by the VAT payers independently carry out the supply of goods/services and make payments with suppliers/consumers, the VAT-payer company, which includes such structural subdivisions, may delegate to them the right to make tax invoices. In order to do this, each branch is assigned a separate digital number, which should be notified in writing to the controlling authority at the place of registration of the legal entity (para.1 of the Procedure for filling in the tax invoice, approved by the order of the Ministry of Finance of 31.12.15, No. 1307).

Corporate Income Tax

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the tax consequences of transactions for provision by the payer of the income tax of reimbursable financial assistance to the founder of a company - an individual and the possibility of offsetting the amount of contribution to the authorized capital of the company’s founder to repay his/her arrears for the financial assistance received by him/her upon reduction of the statutory capital of 27.12.17, No. 3167/6/99-99-15-02-02-15/ІПК clarified the tax consequences of the state transactions for the provision of a reimbursable financial assistance to a founder − an individual. This refers to the situation when the latter does not return to its provider, and the debt for reimbursable assistance is credited as part of reducing his/her contribution to the authorized capital of the company.

In general, received reimbursable financial assistance is not included in the monthly income of an individual. Accordingly, it is not necessary to tax it on the income taxes and the war tax. But since the situation is considered by tax authorities a bit more interesting - its tax consequences also have nuances.

Thus, in fact, there is a return to the founder of funds, which he/she previously made to the authorized capital of the company. These funds are his/her investment profits. Therefore, the founder must independently determine the total financial result from his/her transactions with investment assets and independently submit an annual declaration, as well as pay the tax (para. 170 of the Tax Code of Ukraine, hereinafter − TCU).

Regarding the income tax, then para.III of the TCU does not provide for any adjustment differences either for the transaction of provision of reimbursable financial assistance, not for the transaction for the enrolment of similar claims. And therefore, when determining the financial result, such transactions should be reflected under the rules of accounting.

As for the value added tax (hereinafter − VAT), the subject to taxation does not arise. After all, the provision of reimbursable financial assistance does not fall under the transaction of supplying goods or services.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Stay in the Register of Non-Profit Institutions and Agricultural Service Cooperative Organizations” of 15.12.17, No. 3017/6/99-99-15-02-02-15/ІПК reports that the agricultural servicer the cooperative is not subject to inclusion in the Register of non-profit institutions and organizations. Such entities simultaneously do not meet all the requirements specified in para. 133.4.1 of TCU, they can not be identified as a non-profit organization for TCU purposes. Consequently, they are compelled to pay and pay the income tax in the manner established by sec. III and sub-sec. 4 of sec. XX of TCU.

The State Fiscal Service of Ukraine in its individual tax advice “On Taxation of Interest on the Deposit of Non-Profit Organizations” of 29.12.17, No. 3208/6/99-99-15-02-02-15/ІПК reported that the interest on the deposit received by the public unions (non-profit organizations), are not subject to the income tax.

It should be understood that this refers to the interest earned within the statutory activities of the non-profit organization and used to finance its expenditures, the realization of the goals (aims, objectives) and activities defined by the constituent documents without the distribution of such income (profits) among the founders (participants) (para. 133.4 of the Tax Code of Ukraine, hereinafter − TCU).

If the non-profit organization violates the conditions for using the received interest income, defined in para. 133.4 of the TCU, it will lose its non-profit status and become a taxpayer of the income tax on the general terms.

The State Fiscal Service of Ukraine in its individual tax advice “On Taxation of Cloud Services Transactions Provided by a Non-Resident” of 09.01.18, No. 82/6/99-99-15-02-02-15/ІПК clarified the tax implications, which should be expected by the payers, who leased a server (disk space) from a non-resident.

Thus, when paying funds for the so-called cloud services to a foreign partner, the payer should keep from this amount the repatriation tax (15%). Of course, if the rules of the international treaty do not set other requirements.

In addition, since the place of delivery of such a service is the customs territory of Ukraine, they are subject to value added tax (hereinafter − VAT). Therefore, in accordance with para.180.2 of the TCU, the recipient of services (resident) must calculate and pay VAT to the budget for such a transaction.

The State Fiscal Service of Ukraine in its individual tax advice “On the exemption from taxation of income of a non-resident in the case of receiving a certificate after the end of the reporting year” of 15.01.18, No. 158/6/99-99-12-02-03-15/ІПК drew attention on the nuances of the use of the certificate on the resident status of a non-resident counterparty to avoid double taxation (para. 103.4 of TCU).

Such reference for the previous financial year can be used as a basis for the release (reduction) of the imposition of a tax on repatriation in accordance with the terms of an international agreement in the reported year. But only on condition that the non-resident will submit a certificate for this reporting tax year after its expiration. It should be emphasized that otherwise, such income from the source of origin from Ukraine is taxed in the general order (para. 103.10 of TCU).

PIT and War Tax

The State Fiscal Service of Ukraine in its Individual Tax Advice “On clarification of the indicators of the declaration in case of excessive withholding tax on non-resident income” of 22.12.17, No. 3110/6/99-99-15-02-02-15/ІПК reported: if a resident submitted a corrective calculation on the reduction of the amount of income tax paid to a non-resident, penalties to be not applied.

It should be recalled that if in the next tax periods the taxpayer independently finds errors in his/her previously submitted tax return, he is obliged to send a clarifying account to such a tax return (para. 50.1 of TCU).

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Taxation of Optional Medical Examination of Employees” of 20.12.17, No. 3060/6/99-99-13-02-03-15/ІПК clarifies that in case of transfer of funds the health care institution for medical examination, which is not obligatory, such amount should be taxed on income tax as an additional benefit.

The State Fiscal Service of Ukraine in its individual tax advice “On filling in the Tax calculation of the amount of income accrued (paid) in favour of individuals, and the amounts of tax deducted from them in f. 1ДФ” of 28.12.17, No. 3190/6/99-99-13-01-01-15/ІПК reported: incomes that are not subject to the war tax, are to be necessary included in the indicators of the accrued and paid income of the line “The war tax” of sec. II of f. 1ДФ.

The State Fiscal Service of Ukraine in its individual tax advice “On the Necessity to Withhold the Personal Income Tax and the War Tax” of 10.01.18, No. 100/6/99-99-13-01-01-15/ІПК clarified: in the case of accrual (payment) to an individual-entrepreneur – the unified tax payer of the third group of income from activities not specified in his/her accounting data and in the register of the unified tax payers, the business entity does not withhold the income tax and the war tax. But this income should be reflected in the form No. 1ДФ under the sign of income “157”.

The State Fiscal Service of Ukraine in its individual tax advice “On the Implementation of the Taxation and Payment of Personal Income Tax and the War Tax” of 10.01.18, No. 101/6/99-99-13-01-01-15/ІПК explained: if a legal entity has a subdivision  (communication office) located in the territory different from that legal entity and which is not authorized to accrue the income tax, the legal entity transfers this tax withheld from the employees of the subdivision to the local budget at the location of such a subdivision. The basis for such a conclusion is para. 168.4.4 of TCU, according to which the income tax is paid to the budget accounts at the location of separate subdivisions.

 As for the war tax, the norms of para.168.4.4 of TCU do not apply to it, therefore, the war tax is paid in full to the budget at the location of legal entity.

Unified Social Contribution

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Exemption from Payment of the Unified Contribution of Individuals-Entrepreneurs who are Retirement Persons after Career Length” of 26.12.2017, No. 3135/Д/99-99-13-02-01-14/ІПК reported that from January 1, 2018, individuals – entrepreneurs (unified tax payers and on general system) who reached the retirement age (60 years old, have an insurance record of at least 25 years), and invalids who receive a pension in accordance with the law (regardless of type) or social assistance, should not pay for themselves the unified contribution (part 4 of Art. 4 of the Law of Ukraine “On the Collection and Accounting of the Unified Contribution to the Mandatory State Social Insurance” dated 08.07.10, No. 2464-VI). The SFSU emphasized on this in its advice and reminded that for the months of 2017, only entrepreneurs who are retired on the basis of old age or invalids who receive pensions or social assistance according to the law do not pay the unified contribution for themselves.

Thus, entrepreneurs who have reached the retirement age but receive an old-age pension, such as pension after career length, are obliged to pay the unified contribution in the general terms for the months of 2017. But starting from the calculations for January 2018, they will no longer pay the unified contribution for themselves.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On payment of the Unified contribution by a person who carries out independent professional activity” of 26.12.17, No. 3136/Ш/99-99-13-02-01-14/ІПК clarified: a person, which carries out independent professional activities and does not receive income (profit) in a reported year or a particular month of the accounting year from such activity, is obliged to determine the basis of calculation of the unified contribution, which can not be less than the size of the minimum insurance premium, despite the presence of labor relations with the employer.

Representatives of the fiscal department argue: individuals who conduct independent professional activities (attorneys, notaries, etc.), must pay the unified contribution of not less than the minimum amount until they are withdrawn from the register as payers of the unified contributions. The self-employed person may be dismissed from the register on the basis of the application No. 8-OPP submitted to the controlling body at the main place of account and application for the withdrawal from the account of the payer of the unified contribution in the form No. 7-USC, said the fiscal service.

The entry of a record of the termination of independent professional activity by an individual in the Register of self-employed persons does not terminate its obligations arising during the conduct of this activity and does not change the terms, the procedures for fulfilling such obligations and the application of sanctions for non-compliance.

The State Fiscal Service of Ukraine in its individual tax advice “On the calculation of USC, if a sick leave sheet to be submitted after dismissal” of 29.12.17, No. 3206/6/99-99-15-03-02-15/ІПК clarified: assistance according to temporary disability is not payment for time worked. Consequently, the unified contribution should not be accrued on the amount of temporary disability benefit accrued to a person after his/her dismissal.

 It should be recalled that according to para. 2 of Art. 7 of the Law of Ukraine “On the Collection and Registration of the Unified Contribution to the Mandatory State Social Insurance” of 08.07.10, No. 2464-VI, if the salary is calculated for the time worked after dismissal, in order to calculate the unified contribution, this amount is divided by the number of months for which it has been accrued. As for accruals for time not worked after dismissal, they are not subject to the unified contribution.

Consequently, if the a sick leave sheet s submitted to the enterprise after the employee’s dismissal, and temporary disability falls for the period of work before dismissal, there are no grounds for accruing the unified contribution to the amount of the sick leave, and the explanation of the representatives of the fiscal department confirms this.

The State Fiscal Service of Ukraine in its letter “On the calculation and payment of the unified contribution” of 17.01.2018, No. 1431/7/99-99-13-02-01-17 reminded: since 01.01.18, round of the unified contribution payers included members of the farm, if they do not belong to persons who are subject to insurance on other grounds (para. 51 of the first part of Art. 4 of the Law of Ukraine “On collection and accounting of the unified contribution to the mandatory state social insurance” of 08.07.10, No. 2464-VI, hereinafter − Law on USC).

Representatives of the fiscal department noted that the members of the farm are not payers of the unified payment in the sense of Law on USC, if:

• they are both insured at the same time and employers pay unified contribution to them from the amount of the accrued salary and/or the amount of remuneration for the performance of works (rendering of services) under civil law contracts;
• they are individuals − entrepreneurs, heads of farms, both legal entities and individuals − entrepreneurs with the status of family farming.

In addition, farmers are exempted from paying unified contribution if they receive a retirement pension or are persons with disabilities or have reached the age specified in Art. 26 of the Law of Ukraine “On Compulsory State Pension Insurance” of 09.07.03, No. 1058-IV, and receive a pension or social assistance in accordance with the law (part four of Art.4 of the Law on USC).

Form 01.01.18 the basis for the calculation of unified contribution for members of farms is the amount of income (profit) received from their activities, which is subject to income tax (para. 2 of part 1 of Art. 7 of Law on USC). In this case, the amount of unified contribution may not be less than the size of the minimum insurance premium per month. If the payer does not receive income (profit) in the reporting quarter or in a separate month of the reporting quarter, he/she is obliged to determine the basis of payment and pay unified contribution in the amount not less than the minimum insurance premium.

Other Taxes and Fees

The State Fiscal Service of Ukraine in its letter “On Administration in 2018 of the Environmental Tax” of 05.01.18, No. 466/7/99-99-12-03-04-17 explained environmental tax payers should expect in 2018.

The fiscal authority, in particular, stressed that the rates of environmental tax increased by 11.2%. Increased rates should be applied when calculating tax liabilities for the relevant taxation objects that arose from 01.01.18.

In addition, controllers told about the deadlines for filing tax returns and paying tax obligations on the environmental taxes for:

• IV quarter 2017 − 09.02.18, and the last day of the tax payment − 19.02.18;
• I quarter 2018 − 10.05.18 and 18.05.18 respectively;
• II quarter 2018 − 09.08.18 and 17.08.18 respectively;
• III quarter 2018 − 09.11.18 and 19.11.18 respectively;
• IV quarter 2018 − 11.02.19 and 19.02.19 respectively.

At the same time, the representatives of the fiscal department noted: the amount of tax charged for emissions, discharges of pollutants and the placement of waste should be transferred by a single payment order in the accounts opened in the State Treasury, which ensure the distribution of these funds in the ratio defined by the Budget Code of Ukraine:

• 45% − to the general fund of the state budget (except for the tax charged for the generation of radioactive waste (including accumulated) and/or temporary storage of radioactive wastes by producers over the established terms of the license);
• 55% − to the special fund of local budgets (except for the tax that is charged for the generation of radioactive waste), including:
• rural, settlement, city budgets, budgets of united territorial communities established in accordance with the law and a prospective plan for the formation of community territories − 25%;
• regional budgets and the budget of the Autonomous Republic of Crimea − 30%;
• budgets of Kyiv and Sevastopol cities − 55%.

At the same time, the tax that is charged for the formation of radioactive waste, on the basis of Art.10 and para.6 of Art.11 of the Law of Ukraine “On the State Budget of Ukraine for 2018” of 07.12.17, No. 2246-VIII, is counted by 50 percent to the general fund of the state budget and the special fund of the state budget. According to the decision of the taxpayer, the tax can be paid monthly in the amount of one third of the planned volume for the quarter with a recalculation based on the results of the basic tax (reporting) period.

If the environmental tax payer from the beginning of the accounting year does not plan emissions, discharges of pollutants, waste placement, and the generation of radioactive waste during the reporting year, he/she must notify the appropriate control authority at the location of the sources of pollution and make a statement of the arbitrary form for the absence of it in the reporting year of the environmental tax calculation object. Otherwise, the taxpayer is required to file an Environmental Tax Declaration in the general case.

The State Fiscal Service of Ukraine in its letters “On the Specifics of Rent Collection in 2018” of 18.01.18, No. 1464/7/99-99-12-03-04-17 and “On Administration of rent for special use of water in 2018” of 19.01.18, No. 1579/7/99-99-12-03-04-17 reported what rent payers should expect in 2018.

Consequently, payers of rent for the use of subsoil should pay attention to the following innovations in 2018:

1) it was expanded the list of objects that are not the subject to rent due to the volume of gas (methane) of degassing of coal deposits, which does not meet the quality requirements for natural gas intended for transportation, industrial or municipal consumption (para. 252.4.8 of the Tax Code of Ukraine, hereinafter − TCU);

2) it was introduced privileged rates in the amount of 12% and 6% of the value of objects subject to rent for natural gas, which will be extracted from deposits up to and beyond 5 000 meters respectively (hereinafter − preferential rate). Thus, the identification of the reporting period, in which privileged rates could be applied, can be made on the basis of the relevant sections obtained from the payer of the well Passport;

3) it was approved the rent rates for hydrocarbons produced in the conditions of production sharing agreements of 2 and 1.25% for oil and natural gas respectively (para. 252.20 of TCU);

4) from 2018 it was introduced the distribution of rent received from hydrocarbon raw materials in the ratio of 5 to 95 percent of the general fund of local and state budgets respectively (para. 41-42 of Art. 64 and para.51 of Art. 29 of the Budget Code of Ukraine).

That is, in January 2018, the payment of the rent for the use of mineral resources for the extraction of hydrocarbon raw materials paid by taxpayers in December 2017 will be credited in full to the general fund of the State Budget of Ukraine;

5) the rent rates for the use of mineral resources for non-mining purposes are increased, namely:

• for storage of natural gas and gaseous products, oil and other liquid petroleum products rates increased by 16.7%;
• for keeping wine materials, production and storage of wine products, as well as for carrying out other business activities − by 16.8%;
• for the cultivation of mushrooms, vegetables, flowers and other plants − by 16.2%;
• for storage of food products, industrial and other goods, substances and materials − by 17.6%.

The representatives of the State Fiscal Service of Ukraine (hereinafter − SFSU) informed the payers of rent for special use of water about the deadlines for reporting and payment of rent in 2018:

1) the deadlines for submission of tax returns and payment of tax obligations on rent payments are considered as:

• quarter IV, 2017: February 9, 2018, and the last day of payment of tax − February 19, 2018;
• quarter I,  2018: May 10 and 18, 2018 respectively;
• quarter II: August 9 and 17, 2018 respectively;
• quarter III: November 9 and 19, 2018 respectively;
• quarter IV: February 11 and 19, 2019 respectively;

2) payers of the rent pay the amount of rent payment by one payment order to the accounts opened in the bodies that carry out treasury service of budget funds, which ensure the distribution of these funds in the following ratio:

• 45% of the rent − to the general fund of the state budget (except for rent for the special use of water of water objects of local significance);
• 45% of the rent − to the general fund of local budgets (except for rent for the special use of water of water objects of local significance), which is credited to the Autonomous Republic of Crimea and regional budgets at the place of its collection;
• 10% of the rent (except for rent for special use of water of water bodies of local significance) − to the special fund of the state budget;

3) from 2018, the norm of para. 255.3 of TCU will determine the subject to rent  as the actual volume of water, which is accounted as the result of water intake and water treatment, for example, clearing or processing to the regulatory requirements for consumption set for the corresponding water object.

Accounting and Reporting

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Recovery of the Electronic Control Tape” of 12.12.17, No. 2961/6/99-99-14-05-01-15/ІПК clarified whether business entities should restore lost electronic control tape in case of failure of the fiscal unit of the cash register.

The current legislation does not require the cash register users or service centers to reproduce either the electronic version or the printed version of the control tape.

At the same time, users of the cash register are not exempted from liability, if the control tape was not printed or created electronically at all.

It should be recalled that if the service center during the warranty (post-warranty) repair replaced the defective fiscal unit, information from the monthly reports of the cash register over the past three years should be restored in it.

Representatives of the fiscal department noted that information on copies of settlement documents, as well as copies of fiscal reporting checks made in the electronic form of the cash register, which are stored on the carrier tape in the form of data packets.

The State Fiscal Service of Ukraine in its individual tax advice “On the Procedure for Determining the Tax (Reporting) Period by Producers of Agricultural Products for the Application of para.137.5” of 11.01.18, No. 106/6/99-99-15-02-02-15/ІПК informed that from 01.07.17, agricultural producers – having profits should determine the reporting periods for profit tax according to the general rules. Representatives of the fiscal department noted that in connection with the “liquidation” of Art. 209 of TCU, which defined the criteria for agricultural products, farmers lost the right to a special period of the income tax reporting.

Consequently, agricultural producers, who applied the annual tax (reporting) period from 01.07.16 to 30.06.17 and whose annual income exceeded UAH 20 million starting from 01.07.17 from any activity in 2016, are subject to reporting (tax) periods − three calendar quarters and a year.

If the annual income of such taxpayers did not exceed UAH 20 million, they should calculate and report income tax for the second half of 2017 as an aggregate sum for the year during the 60 calendar days that occur on the last calendar day of the reporting year.

The State Fiscal Service of Ukraine in its individual tax advice “On the adjustment of the financial result to the amount of the provision for the payment of pensions” of 19.01.18, No. 232/6/99-99-12-02-03-15/ІПК reported whether it is necessary to correct financial result on the costs associated with the formation of security for the payment of preferential pensions.

Such expenses are referred by the representatives of the fiscal department directly to the costs associated with payment of labor. Thus, it is not required to make adjustment under paras. 139.1.1 and 139.1.2 of TCU. Consequently, the formation and use of collateral to compensate for preferential pensions will be exclusively based on accounting rules.

The tax authorities paid attention to their advice at the use of collateral that was created before 01.01.15. Thus, if the cost of creating such a reserve is not included in the object of taxation until 01.01.15, then, using it today, the payer can reflect expenses according to para. 24 of sub-para. 4 of sec. XX of TCU.

Control and Responsibility

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Regulation on the National System for the Biometric Verification and Identification of Citizens of Ukraine, Foreigners and Stateless Persons” of 27.12.17, No. 1073 in order to ensure national security in Ukraine, introduced the national system of biometric verification and identification. Due to the system, it will be identified foreigners and stateless persons entering Ukraine, leaving Ukraine, and monitor compliance with the rules of their stay in the territory of Ukraine.

The functioning of this system means that biometric data (parameters) will be taken at foreigners and stateless persons entering Ukraine and exiting from the state. Namely - fingerprints and photo of faces.

Also, the following information will be used for identification and verification of the person: surname, first name, patronymic (if any), date of birth, gender, place of birth, passport document and its electronic appearance, state border crossing, etc. The State Migration Service of Ukraine, the Administration of the State Border Guard Service, the National Police, the Ministry of Internal Affairs, the Ministry of Foreign Affairs, foreign diplomatic institutions, the Ministry of Infrastructure, the Security Service of Ukraine, the Foreign Intelligence Service and the Ministry of Defense will have access to this information.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for the State Control of International Transfers of Dual-Use Goods” of 11.01.18, No. 1, made amendments to the Procedure for the State Control of International Transfers of Dual-Use Goods, approved by the Cabinet of Ministers on January 28, No. 86.

Innovations are introduced into the Unified List of Dual-Use Goods. It should be recalled that currently there are five such lists:

• goods that can be used in the creation of conventional weapons, military or special equipment;
• goods that can be used in the creation of missile weapons;
• goods that can be used to create a nuclear weapon;
• goods that can be used in the creation of chemical weapons;
• goods that can be used in the creation of bacteriological (biological) and toxic weapons.

Consequently, with the entry into force of such changes, the subjects of foreign economic activity will already need to be guided by the Unified List of goods. By the way, Government clearly affirmed in it that the control of the goods included in this List also applies to any goods not included in it (including installations), if they contain one controlled component or more that is the main element of such goods and may be seized or used for other purposes.

Changes start in 90 days after they are published.

The Ministry of Finance of Ukraine by its Order “On approval of the procedure for filling in and issuing the customs certificate of transit (origin) of the goods EUR.1” of 20.11.17, No. 950, which approved the new Procedure for filling in and issuing the customs certificate of transit (origin) of the goods EUR.1. From now on, it will be issued in the unified procedure for the implementation of the provisions of the following Agreements:

• Free Trade Agreements between Ukraine and the EFTA States;
• Agreements on agriculture between Ukraine and the Kingdom of Norway;
• Agreements on agriculture between Ukraine and Iceland;
• Agreements on agriculture between Ukraine and the Swiss Confederation;
• Free Trade Agreement between the Government of Ukraine and the Government of Montenegro;
• Association Agreements between Ukraine, on the one hand, and the European Union, the European Atomic Energy Community and their Member States, on the other hand;
• other international treaties of Ukraine, concluded in the manner prescribed by law, which provide for an identical procedure for filling and issuing the customs certificate of transit (origin) of the goods EUR.1.

The EUR.1 certificate will be issued if it needs to be presented as proof that the goods meet the requirements of the rules of preferential origin established by the Agreements in the case of applying preferential import duty rates.

It will be issued by a customs officer at the time of export of the goods at the place of its customs clearance or after the export of the goods in the cases specified by the Agreements.

In order to receive the EUR.1 certificate, the exporter or authorized representative will have to submit the following documents to the subdivision of the customs office in charge of issuing the certificate:

• an application containing a declaration from the exporter, in the form prescribed by the Agreements, and/or its electronic copy;
• an electronic copy of the certificate in case of filling in its typewriter and (if any) the certificate form filled in accordance with the requirements of the agreements;
• a declaration of the supplier (manufacturer) of goods having a preferential status of origin (Annex 1 to this Procedure),

and/or the declaration of the supplier (manufacturer) of goods not having a preferential status of origin (Annex 2 to the Procedure),

and/or long-term declaration of the supplier (manufacturer) of goods having a preferential status of origin (Annex 3 to the Procedure),

and/or the long-term declaration of the supplier (manufacturer) of goods not having preferential status of origin (Annex 4 to the Procedure), confirming the preferential origin of goods from Ukraine in accordance with the rules of determination of preferential origin established by the Agreements and/or their electronic copies.

Labor and Salaries

The Ministry of Health of Ukraine by its Order “On the recognition as invalid the order of the Ministry of Health of Ukraine dated December 29, 1993, No. 256” of 13.10.17, No. 1254 cancelled from December 22, 2017 the List of heavy work and works with harmful and dangerous working conditions, which prohibits the use of labor of women (hereinafter − List). The action of the Order of the Ministry of Health, which was approved by the List, was terminated in order to bring normative legal acts into compliance with the requirements of gender policy.

Only chapter 3 of section I of the List “Mining Works” is in force, but it is also temporarily – until the completion by Ukraine of the procedure for termination of the Convention on the use of women’s labor in underground work in mines of any kind No. 45.

The Ministry of Social Policy of Ukraine by its Order “On Approval of Methodological Guidelines for the Implementation of Guidance” of 11.10.17, No. 1611 which approved the Guidelines for the Introduction of Guidance (hereinafter – Guidelines).

Guidance involves training directly at the workplace by transferring the experience and knowledge of the workforce to a person in need of professional training and skills development. The guidelines determine the conditions for conducting guidance, the powers of employees and mentors, and ways to stimulate mentors. Guidance is recommended to be carried out with the consent of the employee and directly during his/her performance of his/her job duties. It is recommended to organize guidance on the basis of an order of the head of the company.

The department recommends to establish the following types of material and moral incentives for the duties of guidance: bonuses for the qualitative training of an employee; bonus for early completion of guidance; provision of one-time remuneration; provision of annual leave in a convenient time for mentor; career advancement solution; awarding the honorary title “Best company mentor”, etc.

The Labor Code of Ukraine does not include a term such as “guidance”, but the improvement of the system of professional training of employees and the conditions for conducting guidance is stipulated in para.1.36 of Section I of the General Agreement on the Regulation of Basic Principles and Standards for the Implementation of Socio-Economic Policy and Labor Relations in Ukraine.

The Ministry of Social Policy of Ukraine in its letter “On the introduction of quotas for employers with a number of full-time employees from 8 to 20 persons for the employment of persons of pre-retirement age” of 16.11.17, No. 718/0/126-17/241 reported: in case of failure by the employer during the year, the quota for employment of citizens of the pre-retirement age, it should be charged fine for every unreasonable refusal to employ such persons within the quota of twice the amount of the minimum wage established at the time of detection of the violation (para. 2 of Art. 53 of the Law of Ukraine “On employment of population” of 05.07.12, No. 5067-VI).

It should be recalled: the quota for employment of non-competitive citizens (in particular, people of pre-retirement age, which until the onset of the right to a pension on the basis of not more than 10 years old) is 5% of the average number of full-time employees for the previous year for all enterprises, institutions and organizations with a staff number of more than 20 people.

In addition, from 2018, a quota for the employment of persons of pre-retirement age in the amount of at least one person in the average number of full-time employees was introduced for enterprises (institutions, organizations) with a staffing of 8 to 20 persons.

However, the requirement to implement the quota for the employment of persons of pre-retirement age for employers with a number of full-time employees of 8 to 20 persons does not apply to individuals-entrepreneurs.

Controlled Transactions and Transfer Pricing

The State Fiscal Service of Ukraine in its individual tax advice “On the Recognition of Controlled transactions” of 09.01.18, No. 81/6/99-99-15-02-02-15/ІПК noted: the amount of fines, penalties, penalties for violation of the conditions of return a loan to a non-resident is also taken into account when determining the value criterion for controlled transactions. Namely − when determining the volume of transactions with a separate non-resident.

In this regard, the customs officers reminded to the payers what price they would have to pay in the event of an error in the submitted Transaction Control Report. Namely − if the payer has not included in such a report at least one transaction that falls under the controlled criterion. For such an omission the taxpayer should pay a fine:

• in the case of failure to submit the Report on Controlled Transactions − 300 of living wage amounts for an able-bodied person, established by law on January 1 of the reporting year;
• 1% of the amount of controlled transactions not included in the report, but not more than 300 of living wage amounts for an able-bodied person, established by law on January 1 of the reporting year, for all undeclared controlled transactions;
• 3% of the amount of controlled transactions for which documentation has not been submitted, established by paras.39.4.6 and 39.4.8 of the Code, but not more than 200 living wages for an able-bodied person, established by law as of January 1 of the reporting year, for all controlled transactions performed in the corresponding reporting year.

It should be recalled that the payment of these fines does not relieve the payer of the obligation to submit a report on controlled transactions and/or transfer pricing documentation.

Securities Markets

The President of Ukraine signed the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on Facilitation of Business and Investment Attraction by Securities Issuers” of 16.11.17, No. 2210-VIII.

The law provides for a series of changes to the law governing securities transactions. In particular, the new law:

• improved order of securities issue, information disclosure system on the stock market, corporate governance in joint-stock companies;
• organized the activity of providing information services in the stock market;
• provided for an exclusive list of cases of non-distribution of requirements regarding the necessity of issuing a prospectus of securities by the issuer;
• improved and clearly written articles related to the issuance, approval, disclosure of the prospectus and the validity period of such a prospectus;
• cancelled the disclosure of the securities prospectus in paper form;
• improved the rules on regular information about the issuer, in particular:
• the requirements for public and private joint-stock companies are differentiated;
• the period of disclosure of information on holders of voting shares of private joint stock companies was reduced from 10 to 5%;
• additional disclosure requirements by separate categories of issuers were excluded;
• requirements for independent directors were improved;
• separate requirements for independent directors of banking institutions were specified;
• the mechanism of payment of dividends was improved;
• restrictions when determining the quorum of the general meeting and the rights to participate in voting at the general meeting were specified;
• the issue of the election of the company’s auditor was solved and the definition of the terms of the contract was transferred to the competence of the supervisory board from the general meeting;
• it was provides access to documents of a joint-stock company containing information about the financial and economic activities of a joint-stock company, each shareholder owning a large block of shares, namely − 10% or more;
• the features of corporate governance in joint-stock companies − banks are taken into account;
• it was provided for a transition period for joint stock companies to ensure the composition of the supervisory boards and their committees in accordance with the Law within one year from the date of entry into force and other provisions.

Temporarily Occupied Territory

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for the Provision of Monthly Targeted Assistance to Internally Displaced Persons to Cover the Accommodation Costs, Including for the Payment of Housing and Utilities Services” of 20.12.17, No. 1044 amended the Procedure for the provision of monthly targeted aid to internally displaced persons to cover the cost of living, including for payment of housing and utilities services. The relevant resolution was developed by the Ministry of Social Policy.

Consequently, if an internally displaced person has a housing located in a controlled territory of Ukraine and was destroyed or uninhabitable as a result of the ATO conducting, it should be added to the application a copy of the inspection report of the technical condition of the dwelling (house, apartment) for the approved form. The act should be made by the commission formed by the district state administration, the military-civilian administration, the executive body of the village, settlement, city, district in the city (in case of formation), or the executive body of the council of the united territorial community.

The Other Things

The Ministry of Health of Ukraine by its Order “On Amendments to the List of Medicinal Products Forbidden for advertising, Released Without a Prescription” of 14.11.17, No. 1408 approved the List of medicinal products forbidden for advertising non-prescription (hereinafter − List).

Criteria used in the determination of medicinal products, for which advertising is prohibited, are approved by the order of the Ministry of Health of 06.06.12 р. № 422. The list includes, in particular, medicinal products whose application can cause addiction syndrome; medicines used exclusively for the treatment of women during pregnancy and children under 12 years of age; medicines containing narcotic drugs, psychotropic substances and precursors; medicines for the treatment of tuberculosis, tumor diseases, diabetes, etc.

According to Art.27 of the Law of Ukraine “On Medicines” of 04.04.96, No. 123/96-ВР persons guilty of violating the legislation on medicinal products, are subject to disciplinary, administrative, civil or criminal liability in accordance with the law.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for State Registration (Re-registration), De-registration of Cars, Buses, and Self-propelled Vehicles Designed on the Chassis of Cars, Motorcycles of All Types, Stamps and Models, Trailers, Semitrailers, Motorbikes, Other Equivalent to of these vehicles and mopeds” of 06.12.17, No. 1092 made some adjustments to the order of registration of vehicles.

From now on, registration, re-registration and de-registration of the car can be done not only through the service centre of the Ministry of Internal Affairs, but also through the centre for providing administrative services.

Centres of administrative services providing are government agencies that are created under local councils on the one stop principle for the provision of administrative services to individuals and legal entities.

In particular, in order to register the car, specialists of the administration centre will be able to connect to the necessary electronic databases and thus accept, verify the relevant documents and issue the executed results.

Also the number of documents confirming the legality of the purchase of a vehicle increased. Consequently, the contracts of purchase and sale (mines, deliveries), donations of vehicles, as well as other contracts concluded and executed in the centres of rendering of the administrative services (in the presence of the administrators of such centres) will now also certify the acquisition of right of ownership of the car by a citizen.