Legislation Overview (October 2017)

Taxes

VAT

The Cabinet of Ministers of Ukraine adopted the Resolution “On Approval of the Procedure for Granting the Instalment Payments of Value Added Tax when the Delivery of Equipment and Machinery to the Customs Territory of Ukraine, in accordance with the list specified in paragraphs 58 and 59 of sub-section 2 of Section XX “Transitional Provisions” of the Tax Code of Ukraine of 04.10.17, No. 775 approved the Procedure for Granting the Instalment Payments of Value Added Tax (hereinafter − VAT) when the importation of equipment and machinery into the customs territory of Ukraine. This refers to the equipment listed in paras. 58-59 of sub-sec. 2 of sec. XX of the Tax Code of Ukraine (hereinafter − TCU). In particular:

1) equipment imported for use in the woodworking industry:

• machines for processing wood (commodity item 8465 according to Ukrainian Classification of Commodities for Foreign Economic Activity);
• dryers for wood (commodity subcategory 8419 32 00 00 according to Ukrainian Classification of Commodities for Foreign Economic Activity);
• pressing machines for the production of particleboards or wood-fibre boards (commodity sub-item 8479 30 according to Ukrainian Classification of Commodities for Foreign Economic Activity).

2) equipment imported only for the manufacture of medical products (commodity subcategories 8421 39 20 00, 8422 30 00 99, 8422 90 90 00, 8428 20 20 00, 8428 20 80 00, 8477 10 00 00, 8477 20 00 00, 8477 30 00 00, 8477 40 00 00, 8477 59 10 90, 8477 90 80 00, 8480 71 00 90 according to Ukrainian Classification of Commodities for Foreign Economic Activity).

In order to receive such an instalment of VAT payment (up to 36 months), it is necessary to submit the relevant application and documents to the customs office of the State Fiscal Service of Ukraine (hereinafter − SFSU):

• business project indicating the technological process with economic calculations and expected results of the activity;
• conclusions of state bodies, expert institutions, organizations, state standards and standards of the enterprise, technical specifications, technical documentation, documents confirming availability of production facilities, premises, and other documents for confirmation of the purpose of import of machinery and equipment;
• documents stipulated by Art. 335 of the Customs Code of Ukraine.

The special commission must take the decision to grant an instalment payment of VAT within 10 working days from the date of receipt of the relevant application. To obtain a positive decision, the following conditions must be met:

• conformity of the declared code of machinery and equipment code according to Ukrainian Classification of Commodities for Foreign Economic Activity;
• confirmation of the declared customs value of machinery and equipment;
• confirmation of conformity of the type of activity of the importing company (or the enterprise on behalf of which the machinery and equipment are imported) to a certain code according to Ukrainian Classification of Commodities for Foreign Economic Activity;
• absence of tax arrears of the taxpayer and the absence of special sanctions in the field of foreign economic activity;
• confirmation of the availability of production facilities, premises, conditions for the registration and storage of goods, finished products.

In case of receipt of an instalment of VAT payment, the business entity will have to submit to the controllers a report on the intended use of the goods imported to the customs territory of Ukraine in the customs regime of import within one working day after payment of part of the amount of the instalment within the time limits specified in the decision on granting the instalment of payment of VAT. Such reports should be submitted throughout the period of use of instalments.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On VAT Taxation for the Free Grant of Goods/Services” of 06.10.17, No. 2154/6/99-99-12-03-02-15/ІПК explained the procedure for imposing the value added tax (hereinafter − VAT) of transactions for the free transfer of goods/services. Representatives of the fiscal department allowed the taxpayer to calculate the tax only once in accordance with the rules of para. 188.1 of TCU, noting that the calculation of compensatory VAT on the requirements of para.198.5 of TCU is not carried out.

Interestingly, controllers usually require accruing VAT twice under free delivery. And only if the goods/services donated free of charge would be taxed in the part of the transaction to which they were included, it is permissible to do without para. 198.5 of TCU. This is evidenced by the actual answer in the category 101.06 “ZIR”.

The State Fiscal Service of Ukraine in the individual tax advice “On the implementation of transactions for the transfer of property by VAT payer to the management of non-payer of VAT” of 17.10.17, No. 2259/6/99-99-15-03-02-15/ІПК considered the transfer of property to the management of non-payer of value added tax (hereinafter − VAT), namely, the unified tax payer at a rate of 5%. Representatives of the fiscal department indicated that the unified tax payer can be the manager of the property only after registration by the taxpayer and transition to the unified tax rate of 3%.

After all, when registering a property management contract, the controllers additionally enter into the account of the property manager as a tax payer − responsible for the maintenance and introduction of taxes to the budget during the execution of the contract. At the same time, under item 180.1 of the Tax Code of Ukraine (hereinafter − TCU), the property manager should keep separate VAT-accounting for business transactions related to the use of property received in management under the relevant contracts.

That is why during the registration of a property management contract, the manager must submit documents for the registration of such an agreement together with the registration application of the VAT payer.

It should be recalled that under a property management contract, one party (the grantor of the management) transfers to the second one (the manager) for a certain period the property to the management, and the other party undertakes for the payment the management of this property on its behalf in the interests of the grantor of the manager or the person designated by him/her (beneficiary). This is stated in Art.1029 of the Civil Code of Ukraine.

Corporate Income Tax

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Taxation of Certain

Types of Income” of 26.09.17, No. 2053/6/99-99-13-02-03-15/ІПК has clarified the following situation: if a legal entity, which is in liquidation, pays dividends to shareholders, then such income is taxed under special dividend rules. That is, the tax agent withholds the tax not at the general rate of 18%, but at the rate of 5% (if it is a taxpayer) or 9% (for dividends from non-payers of the income tax, collective investment institutions, non-residents).

If, in the event of liquidation, the legal entity carried out exclusively the distribution of the balance between the shareholders, and not the payment of dividends, the amount of such funds shall be included in the taxable income of taxpayers as other income with appropriate taxation. That is, the income tax should be withheld at a regular rate of 18%.

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 norms found during the inventory and the deficiencies from theft” of 29.08.17, No. 1756/6/99-99-15-02-02-15/ІПК noted that in case of writing off the deficiencies of material values found during the inventory, it is not required any adjustments to financial results.

This transaction will affect the subject to the income tax solely by the rules of accounting. Because sec.III of TCU does not contain the differences on such writing-off.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the adjustment of the financial result before tax on the amount of funds paid in favour of a non-resident for a court decision to recover damages in the form of lost profits” of 09.10.17, No. 2180/6/99-99-15-02-02-15/ІПК reported that it would not be necessary to adjust the financial result on the amount of non-resident reimbursed lost profits for violating the terms of the foreign-economic agreement.

The basis for such a position of representatives of the fiscal department was the nonconformity in the definition of “missed profit” for the definition  of the penalty sanctions (penalties) proposed by the Civil Code of Ukraine.

Consequently, the correction difference of para. 140.5.11 of TCU, which obliges taxpayers to increase financial result on the amount of costs from recognized fines for civil contracts in favour of non-payers of income tax, will not be in the force in this case.

Unified Social Contribution

The President of Ukraine signed the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on Increasing Pensions” of 03.10.17, No. 2148-VIII. The introduction of the mechanism for raising pensions made amendments to the Law of Ukraine “On the Collection and Accounting of the Unified Contribution to the Mandatory State Social Insurance” of 08.07.10, No. 2464-VI (hereinafter − Law on USC). In particular, the maximum base for the calculation of the unified contribution from January 1, 2018 will be 15 times of the minimum wage instead of the 25 subsistence minimum for able-bodied persons (para.4 of sec.1 of Art.1 of the Law on USC).

It should be reminded that now the maximum base for the calculation of the unified payment is amounted UAH 42 100. The draft Law on the State Budget of Ukraine for 2018 provides for an increase in the minimum wage to UAH 3 723, and, therefore, from January 1, 2018 the maximum basis for calculating USC may amount to UAH 55 845.

The size of the minimum insurance premium is not changed and remains at the level of the product of one minimum wage and the current rate of USC.

In addition, according to the made amendments, members of the farm will be included to the circle of payers of the unified contribution, provided that they do not belong to persons who are subjects to the insurance on other grounds.

Individuals-entrepreneurs and members of the farm will be exempted from paying the unified contribution, if they have a disability or have reached retirement age and receive a pension or social assistance.

According to the law, individuals-entrepreneurs, persons engaged in independent professional activities, and members of farms will pay the unified contribution accrued for the calendar quarter, to the 20^th day of the month following the quarter for which the unified contribution is paid (sec.8 of Art.9 of the Law on USC). Now, entrepreneurs in the general system of taxation pay USC for the calendar year to February 10 of the next year, and individuals who carry out an independent professional activity − to May 1 of the following year.

The unified tax payers of the first group lose the right to pay the unified contribution of 0.5 minimum insurance premiums. Consequently, the minimum unified contribution for the unified tax payers of the first group will be set at the same level as for other taxpayers who chose a simplified taxation system − one minimum insurance premium (Art. 7 of the Law on USC).

The changes in the order of voluntary payment of the unified contribution are also provided (Art. 10 of the Law on USC). In particular, the smallest sum of the unified contribution to be paid for the previous period in case of a person’s identification of such a desire is increased by coefficient 2 (for a period up to 12 months) or 1.5 (for a period from 13 to 24 months).

Information from the State Register will be provided to employers, banks, enterprises, institutions and organizations for the purpose of its use for the servicing of citizens (with their consent or in cases established by the legislation on the protection of personal data).

It is planned to introduce in the USC reporting the indicator that will determine the shortcoming in amount of funds from the Pension Fund of Ukraine (para. 97 of sec.VII “Final and Transitional Provisions” of the Law on USC). The payers will report the amount of the unified contribution in the amounts provided by paras. 5 and 14 of Art. 8 of the Law on USC, without changing the amount of the payment of the unified contribution.

The payers of the unified contribution, who are not employers (that is, individuals who do not have employees), will be exempted from performance of the obligations defined by the Law on USC on accrual and payment of the unified contribution, reporting, etc. for the entire period of their unlawful imprisonment in the territory of ATO conducting. In order to do this, a family member’s application for an unlawful imprisonment of the individual should be submitted, which should be confirmed by the data of the state law enforcement agency, which ensures the state security of Ukraine.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Taxation of Financial Assistance to Health” of 26.09.17, No. 2052/6/99-99-13-02-03-15/ІПК noted: if the payment of material assistance for the improvement of health is provided by the provisions on the payment of wage labours (collective agreement, sectoral agreement, etc.), adopted in accordance with the norms of labor legislation, such material assistance for the purpose of taxation is equated to wages and included in the taxable income of an employee in a month, in which its accrual was made.

The amount of such material assistance for the rehabilitation is the basis for the accrual of the unified contribution in the month in which the employer accrues the leave payment. This conclusion, apparently, is due to the fact that maternity care for rehabilitation usually accompanies the provision of leave and is accrued with leave payment.

It should be reminded that in case if the maternity assistance is one-time and its payment is not provided for by a collective agreement or a branch agreement, it is classified as non-payment and is not subject to the income tax within the limits established in para. 170.7.3 of the Tax Code of Ukraine (in 2017 − UAH 2240). In addition, the one-time maternity assistance given to an individual worker in connection with family circumstances, for the payment of treatment or rehabilitation of children, is not subject to the payment of the unified contribution (para. 14 of sec. of the List of types of payments, carried out at the expense of funds of employers, for which the unified contribution for the compulsory state social insurance is not accrued, approved by the resolution of the CMU of December 22, 10, No. 1170).

The State Fiscal Service of Ukraine in the individual tax advice “On the calculation of the unified contribution to the salaries of students who undergo industrial practice at the company” of 17.10.17, No. 2257/6/99-99-13-02-03-15/ІПК insists on the need to accrue the unified contribution to the benefits that students receive while undergoing industrial practice. These payments are referred to as salaries by representatives of the fiscal department, referring to paragraph 17 of the Procedure for providing work places for students, students of vocational schools of production training and industrial practice, approved by the Cabinet of Ministers of Ukraine from 07.06.99, No. 992.

Other Taxes and Fees

The State Fiscal Service of Ukraine in its Individual Tax Advice “On tourist tax” of 09.10.17, No. 2170/ІПК/04-36-12-23-19informed that a person who arrived on a business trip and who was temporary provided accommodation services, to be not a payer of the tourist tax.

In order to avoid accruing of the tourist tax, a person on a business trip must provide the administrative department of hotel/motel (or other tax collector collecting tax) with the documents certifying his/her assign for the business trip.

Accounting and Reporting

The Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” (regarding the improvement of certain provisions)”. Thus, the Law provides for the following amendments:

• it was clarified the requirements for reporting under IFRS enterprises of public interest (companies − securities issuers, banks, large enterprises, etc.);
• the requirements for enterprise size for accounting purposes were set. For example, small businesses are determined those, which metrics meet at least two criteria: the book value of assets − up to 4 million euros; net income from the sale of products (goods, works, services) − up to 8 million euros; average number of employees − up to 50 people;
• it was clarified the requirements for the chief accountant of the enterprise that are of public interest: the availability of higher economic education, the work experience of an accountant/auditor/auditor over three years, the absence of unpaid or unclaimed conviction for committing a crime against property and in the sphere of economic activity;
• the requirements for the registration of primary documents are weakened. Thus, minor deficiencies in the documents are not the constitute grounds for non-recognition of the economic transaction, if such deficiencies are related to the date of drawing up the document, the name of the enterprise on whose behalf the document has been drawn up, the content and scope of the transaction, etc.

The Ministry of Finance of Ukraine by its Order “On Approval of Forms of Information on the Purposeful Use of Lighter and Heavy Distillates, as well as Liquefied Natural Gas and Butane, Isobutene as raw materials in Ethylene Production, Information on the Payment of the Excise Tax Amount, calculated on the basis of the prices for finished products, and the Mortgage Accounting Journal of tax anticipation bill” of 21.08.17, No. 709 approved new forms:

• Information on the intended use of light and heavy distillates, as well as liquefied petroleum gas and butane, isobutene as raw material in the production of ethylene;
• Information on payment of the excise tax amount, calculated on the basis of the prices for finished products;
• Journal of accounting for repayment of tax bills.

These documents are used for the payment of excise taxes in the case of the production and import of the relevant raw materials and petroleum products, as well as for alcoholic beverages, for the manufacture of which ethyl indentured alcohol to be used.

The National Energy and Utilities Regulatory Commission (hereinafter – NEURC) by its resolution “On Approval of the Procedure (Rules) for the Organization and Accounting of Licensed Activities by Business entities in the Heat Supply” of 10.10.17, No. 1223 approved the Procedure (rules) for the organization and accounting of licensed activities by entities in the field of heat supply. This document is intended to regulate the activities of subjects of natural monopolies and business entities in adjacent markets that conduct or wish to carry out the activity of producing heat energy at heat generating units, transport it through main and local (distribution) heat networks, and also supply.

The procedure determines the mechanism, principles, procedures and common methodological principles of organization and accounting for licensed activities separately from other types of activities. For example, for the purpose of forming the full cost price by type of licensed activity in the field of heat supply, administrative costs are allocated according to the distribution base defined by NEURC for the purposes of tariff formation. Other expenses the licensee directly attributes to expenses of that type of activity, with which these expenses are directly connected.

Subjects of management in the field of heat supply report in accordance with the established procedure on the forms of regulatory reporting, which is determined by NEURC. They submit a financial report in accordance with Accounting Regulations 29 “Financial Statements by Segments”, and also report in accordance with the forms specified in this Procedure (Rules) and is given in its annexes 24−26.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Accounting in Controlling Agencies of Joint Ventures Agreements” of 04.10.17, No. 2129/Б/99-99-08-02-01-14/ІПК reports that each participant in the treaties on joint activity without the creation of a legal person is registered in the tax agency and performs the duties of the taxpayer independently.

Also, such agreements between legal entities and/or individuals – entrepreneurs are to be registered in the tax agency, if they are subject to the characteristics of tax accounting and taxation of their activities, and the authorized person under such contracts registered by CAT taxpayer. Otherwise, such contracts are not counted in the controlling bodies.

Representatives of the fiscal department noted: the parties need to obtain appropriate permits, licenses, create places of production and storage of products, etc., if the carrying out of the relevant activities according to the legislation requires them to be available.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Determining the Limit of Cash” of 22.09.17, No. 2038/6/99-99-14-05-01-15/ІПК reminded that newly established enterprises to be entitled to establish cash limit due to forecasted indicators in the first three months of work.

In fact, for such a period, such enterprises may set a cash limit at any rate. But after the expiration of the three-month period from the beginning of the work the company has to transfer the limit of cash at the expense of the actual figures. It was given two weeks for this.

Enterprises that used to use only cashless forms of payments also apply this procedure for calculating the cash limit.

Control and Responsibility

The Ministry of Finance of Ukraine by its the Order “On Approval of the Procedure for the Provision of General Tax Advice” of 27.09.17, No. 811 approved the procedure for the preparation and provision of general tax advisory services.

The Expert Council on the preparation of general tax advisory services under the Ministry of Finance will be responsible for providing proposals and recommendations for the preparation of general tax advisory projects.

General tax advice is provided by:

• on the results of the periodic generalization of individual tax advice provided to the payers by the controlling bodies;
• if there are circumstances indicating the ambiguity of certain norms of tax and other legislation, the control of which is entrusted to the controlling bodies.

In order not to overlook these points, the State Fiscal Service of Ukraine is obliged to provide the Ministry of Finance, quarterly not later than on the 5^th day of the month following each calendar quarter, generalized information on the results of the practical application of taxation legislation, the payment of the unified contribution, along with proposals for the need to provide general tax advice.

Generalizing tax advice is valid until the moment when the Ministry of Finance recognizes the order of its approval as invalid, or the court cancels such a decree by the Ministry of Finance.

It should be recalled that a taxpayer (tax agent and or his/her official) who acted in accordance with a general tax advice can not be punished for acts that contain signs of a tax offense.

The National Bank of Ukraine by its Resolution “On Approval of the Provision on the Organization of Measures to Ensure Information Security in the Banking System of Ukraine” of 28.09.17, No. 95 approved the Provision on the organization of measures to ensure information security in the banking system of Ukraine. This document provides for the enhancing the security of information and cyber protection of the banking system. Reliable information protection is planned to be achieved in two stages:

• 1^st stage (basic − implementation of basic information security measures) − until 01.03.18;
• 2^nd stage (implementation of additional measures − to increase the level of maturity of information security) − until 01.09.19.

The following security measures include:

• protection against malicious code;
• security measures when using e-mail;
• control access to information systems of the bank;
• security measures in the bank’s network;
• cryptographic protection of information, etc.

The document also provides for the appointment of a Chief Information Security Officer (CISO) in the banks and assigning it with sufficient authority to make managerial decisions. Also, banks should form separate units of information security exclusively from the staff of the bank, which directly subordinate CISO.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the obligation to provide documentary scheduled (non-scheduled) inspections of documents and information in electronic form, including scanned copies of documents, which are created on paper” of 03.10.17, No. 2112/6/99-99-14-03-03-15/ІПК reported that taxpayers who make primary documents, accounting registers, financial statements and other documents only in electronic form during inspections should provide controllers, upon their request, with such documents only in electronic form.

It should be recalled that primary and consolidated accounting documents may be prepared in paper or electronic form (para. 2 of Art. 9 of the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” of 16.07.99, No. 996-XIV). In addition, these documents must have the required details, including:

• a personal signature;
• an analogue of a personal signature;
• or a signature equivalent to a personal signature in accordance with the Law of Ukraine “On Electronic Digital Signature” of 22.05.03, No. 852-IV;
• or other data that allow identification of the person who participated in the conduct of the business transaction.

Primary documents prepared in electronic form, are used in accounting, subject to the requirements of the legislation on electronic documents and electronic document circulation.

The State Fiscal Service of Ukraine by its Order “On Approval of the Register of Large Taxpayers for 2018” of 26.09.17, No. 632 approved the Register of Large Taxpayers for 2018. 2 594 business entities were included in it, and that is 82 enterprises more than in 2017.

It should be recalled that after the inclusion of a taxpayer in the Register of large payers and receiving a notice from the State Fiscal Service of Ukraine (hereinafter − SFSU) on such inclusion, the taxpayer must be registered in the controlling body that carries out the support of large taxpayers from the beginning of the tax period (calendar year) for which this Register has been formed (para. 64.7 of TCU).

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 fines accrued by the decision of the relevant state bodies” of 03.10.17, No. 2115/6/99-99-155-02-02-15/ІПК explained how to apply a magnifying adjustment to the financial result specified in para. 140.5.11 of TCU on penalties accrued by state bodies. Adjustments are made only for expenses from recognized penalties accrued under civil law contracts, in accordance with the norms of civil law. Fines accrued for violating other legislation do not take part in the adjustment.

Thus, for example, if a fine is imposed for violating the terms of the contract for the supply of goods to the contractor public-sector employee, such an adjustment should be made. If, for example, a fine has been imposed for violation of tax laws − the financial result should not be adjusted in this situation.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Procedure for Requesting Taxpayers and Ordering, Organizing and Conducting Documentary Non-scheduled Inspections” of 03.10.17, No. 2111/6/99-99-14-03-03-15/ІПК reported that ignoring fiscal requests by the payer or incomplete replies to them could lead to unscheduled tax audit. This is possible due to the failure to provide explanations and documentary evidence on the request, in which the following are recorded:

• violations by the taxpayer of currency, tax and other legislation, the control of which is entrusted to representatives of the fiscal department (para. 78.1.1 of the Tax Code of Ukraine, hereinafter − TCU);
• unreliability of the data contained in the tax returns submitted by the payer (para. 78.1.4 of TCU).

The tax authorities consider it legitimate to investigate documents (their copies) and other tax information not mentioned in the request during such verification.

This conclusion is substantiated by the absence of a direct prohibition in the TCU on the impossibility of carrying out verification on other questions not directly mentioned in the request.

The explanations and documentary evidence provided by the payer upon request may also contain information indicating the unreliability of the data specified in other tax or other tax declarations.

It should be noted that such an approach does not apply to inspections conducted when a payer does not provide for counter-matching of the information specified in the request. That is, on the basis of para.78.1.19 of TCU. In this case, it is possible to verify only the questions fixed in the request.

Financial markets

The National Bank of Ukraine by its Resolution “On Amendments to the Resolution of the Board of the National Bank of Ukraine dated December 13, 2016 No. 410” of 10.10.17, No. 101 weakened the restrictions on the foreign exchange market. Non-bank financial institutions should primarily pay attention for the next liberalization. Thus, the regulator allowed the purchase and transfer of foreign currency, for placing outside Ukraine the guarantee deposit on accounts of international payment systems for banks and non-bank financial institutions (based on an individual license of the NBU). These are the funds used to meet obligations during the transfer of funds abroad.

Securities

The National Securities and Stock Market Commission (hereinafter − NSSMC), by its decision “On information contained in the notice on acquiring the ownership of a dominant controlling shareholder and a public irrevocable claim” of 05.09.17, No. 662, approved a notice form on acquiring the right ownership of a dominant controlling shareholding.

It should be recalled that a person (persons acting jointly) who, as a result of the acquisition of a company’s shares, taking into account the number of shares owned by it and its affiliates, became (directly or indirectly) the owner of the dominant controlling shareholder within the next business day from the date of acquisition him/her right to own such a block of shares is obliged to submit to the NSSMC and to the company the relevant notice (part 1 of Art. 652 of the Law of Ukraine “On Joint Stock Companies” dated September 17, 2008 No. 514-VI).

The National Commission established the amount of information that should include a public irrevocable demand for the acquisition of shares in all shareholders of the company by the person who owns the dominant controlling stake or an authorized person.

Labor and Salaries

The Ministry of Social Policy of Ukraine in its letter “On the employment of part-time” of 14.04.17, No. 8185/0/2-17/13 stated: the employer has no right to refuse an employee to hire on a part-time basis due to the absence of information on the presence of the employee’s main place of work. In the opinion of the agency, such a refusal by the employer is a violation of the labor legislation.

In accordance with part two of Art. 24 of the Labor Code of Ukraine during the conclusion of an employment contract a citizen is obliged to submit a passport or other document certifying a person, a work book, and in cases stipulated by law, also documents on education (specialty, qualification), on the state of health and other documents.

According to paragraph 1.1. of the Guidelines on the procedure for keeping work books of workers, approved by the order of the Ministry of Labor, Ministry of Justice and the Ministry of Social Protection of the Population dated July 29, 1993 No. 58, work books are conducted only at the place of basic work, the Ministry of Social Policy emphasizes. The employer carries out a record of information on work part-time at the request of the employee, at the place of main job.

Consequently, the refusal to employ only on the grounds that the worker did not provide a work record and did not report the presence of the main place of employment may be regarded as a violation of the legislation on labor.

According to paragraph 6 of the resolution of the Plenum of the Supreme Court of Ukraine of November 6, 1992, No. 9 “On the practice of consideration by the courts of labor disputes”, if, as a result of refusal to hire or untimely conclusion of an employment contract, the employee had a forced absenteeism, it must be paid in accordance with part two of the Art.235 of the Labor Code, the Ministry of Social Policy notes.

The Ministry of Social Policy of Ukraine by its letter “On the Application of Part Three of Article 42¹ of the Law of Ukraine “On Employment of the Population” of 18.09.17, No. 2413/0/101-17 clarified the procedure for the application of Part 3 of Art. 42¹ of the Law of Ukraine “On Employment of the Population” of 05.07.2012, No. 5067-VI concerning obtaining a permit for the employment of foreigners and stateless persons.

It should be recalled that from 27.09.17, the employer may obtain this permit on condition of payment of wages not less than:

• 5 minimal wages (in 2017 – UAH 16 000) – for foreign hired employees in public associations, charitable organizations and educational institutions;
• 10 minimum wages (in 2017 – UAH 32 000) – for all other categories of hired workers.

The Ministry of Social Policy believes that these requirements apply to employers who receive a permit for the employment of a foreigner:

• for the first time;
• after termination of the previous employment contract (agreement) and the conclusion of a new one;
• in case of extension of the permit for the use of foreign worker’s work.

Consequently, even if the permit is prolonged, according to the Ministry of Social Policy, the employer must comply with the minimum wage requirement of the foreigner.

At the same time, according to Art. 56 of the Code of Labor Laws of Ukraine, in the agreement between the employee and the employer, both during hiring and afterwards, the worker may be assigned a part-time or part-time working week, the Ministry reminds. Therefore, nothing prevents an employer from accepting a foreigner for a salary of 32 000 hryvnias, but under conditions such as part-time work (it is possible to work even one day a week, and the amount of the calculated wages in this case will be determined according to the time worked).

The agency also notes that in the case of the extension of the permit, documents should be submitted in which the changes have taken place, and therefore, in case of increase of the salary, it is mandatory to submit a copy of the employment contract (agreement), in which the corresponding amount of salary is determined.

The Ministry of Social Policy of Ukraine by its letter “On the application of para. 28 of Procedure No. 1266 for workers with hourly pay system” of 23.05.17, No. 262/0/86-17/273 clarified how to calculate the average daily salary, if the company carried out the wages according to an hourly system and before the occurrence of an insurance case, the employee for good reason had no earnings or the insurance case occurred on the first day of work.

According to para. 28 of the Procedure for calculating the average wage (income, cash) for the calculation of payments for compulsory state social insurance, approved by the Resolution of the Cabinet of Ministers of Ukraine of 26.09.01, No. 1266 (hereinafter − Procedure No. 1266), if in the calculation period prior to the occurrence of an insured event, the worker did not have any earnings for good reason or the insurance case came on the first day of work, the average salary is determined on the basis of the tariff rate (official salary) or its part established on the day it was set insurance case. According to the department, according to the hourly wage system, the tariff rate at the time of the occurrence of an insured event can be calculated as the product of the hourly rate in the month of the occurrence of the insured event to the standard of working time this month.

The average daily salary in the month of the occurrence of the insurance case is calculated by dividing the tariff rate in the month of the occurrence of the insured event on the average monthly number of calendar days (30, 44), the Ministry of Social Policy says, referring to para. 5 of the Procedure No. 1266.

Controlled Transactions and Transfer Pricing

The State Fiscal Service of Ukraine in its letter “On the campaign of controlled transactions reporting” of 18.08.17, No. 22283/7/99-99-12-03-07-17 clarified what features would be taken into account when checking the connection of persons in order to recognize transactions between profitable and non-resident as controlled. According to the representatives of the fiscal department, the connection between the payer and his/her counterpart can testify: the same or similar names of companies; use on the websites of the payer and the counterparty, as well as on the forms of documents of identical logos; signing of contracts and commercial documents by persons having the same names; which are simultaneously the founders / participants, heads or members of the collegial bodies of these companies, etc.

Mobilization and ATO

The Ministry of Defense of Ukraine issued the Order “On Approval of the Amendments to the Instruction on the Procedure and Amounts of Remuneration to the Armed Forces of Ukraine for Direct Participation in Military Conflicts or Counter-Terrorist Operations, Other Measures in a Special Period” of 06.09.17, No. 467, which provides for an increase from August 1, 2017 remuneration of servicemen for direct participation in military conflicts or ATO, other events in a special period.

Consequently, for direct participation in the ATO on the line of the combat collision with the depth of the company’s main points of the first echelon, the execution of combat missions, as well as the tasks of conducting operational intelligence on the territory of the enemy, participation in measures to repel an armed attack on objects protected by servicemen, the release of such facilities in the event of their capture or attempt to forcibly take possession of weapons, combat and other equipment provides a reward of UAH 10 000 (earlier UAH 7 500). For participation in ATO in other places of dislocation within the defined area of its conducting - UAH 4 500 (earlier UAH 3 500).

The Other Things

The Verkhovna Rada of Ukraine adopted the Law of Ukraine “On State Financial Guarantees for Medical Care of the Population” (draft of legislation No.  6327).

In accordance with this law, the state guarantees full payment in accordance with the tariff at the expense of the state budget to provide citizens with the necessary medical services and medical products provided for by the program of medical guarantees.

Within the framework of the program of medical guarantees, the state guarantees citizens, foreigners and stateless persons who permanently reside in the territory of Ukraine and those who are recognized as refugees or persons requiring additional protection, full payment at the expense of the state budget of necessary medical services and medicines, related to the provision of:

1) emergency medical care;

2) primary health care;

3) secondary (specialized) medical care;

4) tertiary (highly specialized) medical care;

5) palliative medical care;

6) medical rehabilitation;

7) medical care for children under 16 years of age;

8) medical care in connection with pregnancy and childbirth.

The program of medical guarantees determines the list and scope of medical services, medicines, payment of which is guaranteed at the expense of the state budget.

The amount of state budget funds allocated for the implementation of the medical guarantee program will be determined annually in the Law of Ukraine on the State Budget of Ukraine as a share of GDP (in percentages) of not less than 5% of GDP of Ukraine.

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Procedure for the Implementation of Assets Arrested on Electronic Bidding” of 27.09.17, No. 719 determined the procedure for the implementation of electronic trading of property, which was arrested in a criminal proceeding or in a proceeding in cases of recognition of unjustified assets and their claims. Here you can buy assets that:

• transferred to the National Agency for the Detection, Investigation and Management of Assets Derived from Corruption and Other Crimes (hereinafter − the National Agency), to be managed on the basis of a decision of the investigating judge, court or the consent of the owner of the assets and subject to implementation;
• are in the administration of the National Agency and are to be implemented as a measure of independent execution of a court decision on confiscation, special confiscation of assets, collection of assets to the state revenue.

Usually, the first bid should be equal to the starting price of the lot. The step of increasing of the starting and each subsequent price of the lot is 1% of the starting price of the lot.

The size of the guarantee fee is set in the rules of electronic bidding, but it can not be less than 5% of the market value of the asset in the evaluation report at the first electronic auction.

By the way, the auction organizers will receive a reward of no more than 5% of the sale price of the lot, but at the same time it can not exceed 200 minimum salaries established on January 1 of the corresponding year, including VAT.