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Legal Hotline_August 9, 2017

LEGAL HOTLINE . 09 August 2017

SINCE AUGUST 1, FREE TRADE AGREEMENT WITH CANADA HAS BEEN IN FORCE

THE NATIONAL BANK ON UKRAINE (NBU) EASED FOREIGN CURRENCY REGULATION

THE LIST OF TRANSACTIONS WHICH ARE NOT SUBJECT TO VAT WAS UPDATED

IT IS PROPOSED TO SELL LAND IN A NEW WAY

IT IS PLANNED TO FORMALISE EMPLOYER’S LIABILITY FOR SALARY ARREARS

IT IS PROPOSED TO USE THE “SINGLE WINDOW” MECHANISM IN INTERNATIONAL TRADE

Contacts

Kateryna Tsvetkova

Attorney at law, Senior Associate

SINCE AUGUST 1, FREE TRADE AGREEMENT WITH CANADA HAS BEEN IN FORCE

The Free Trade Agreement between Ukraine and Canada provides for the abolition of 98% of tariffs for the Ukrainian goods which are exported to Canada. The Agreement regulates relations between exporters of both countries in terms of determining the origin of goods, promoting trade, labour, state procurement, intellectual property issues, dispute resolution procedures, sanitary and phytosanitary measures, etc. The goods subject to the zero tariff rate are listed in the Tariff Schedules of Canada and Ukraine, which are part of the Agreement.


THE NATIONAL BANK ON UKRAINE (NBU) EASED FOREIGN CURRENCY REGULATION

The Resolution of the Board of the NBU No. 74 of August 3, 2017 clarified the conditions allowing residents to purchase foreign currency in order to settle payments with non-residents for the import of goods or services carried out without importation thereof from abroad into the territory of Ukraine. From now on, resident clients will be able to buy foreign currency not just when such products (services) are used for their own consumption outside Ukraine, but also if they are used outside Ukraine under the concluded agreements.

Moreover, the National Bank of Ukraine has raised the amount of balance of banks’ sale and purchase of foreign currency and banking metals authorised for one business day – from 0.5% to 1.0% of the amount of regulatory capital.


THE LIST OF TRANSACTIONS WHICH ARE NOT SUBJECT TO VAT WAS UPDATED

According to the Resolution of the NBU Board No. 73 of August 1, 2017, transactions on cash and settlement services (CSS) that are not subject to value added tax (VAT) include:

  • Opening/closing of accounts of bank customers (individuals and legal entities) in the national and foreign currencies;
  • Documentary registration or confirmation of customers’ settlements;
  • Conducting customers’ settlements;
  • Transactions which ensure the execution of settlements or which are an integral part thereof;
  • Transactions on cash services provision to customers;
  • Transactions involving special payment means;
  • Transactions involving bills of exchange;
  • Transactions involving electronic money.

The updated list will allow banks to correctly assign certain transactions to such that belong to CSS services and are not subject to VAT.


IT IS PROPOSED TO SELL LAND IN A NEW WAY

The Draft Law No. 6725-1 of July 26, 2017, which is registered in the Parliament, stipulates the following innovations regarding the procedure for selling land:

  • The sale of land, which is a state and community property, or rights thereto, except for agricultural land, shall be carried out on land auctions, which may be conducted in the form of electronic auctions;
  • The sale of agricultural land, which is a state and community property, or rights thereto, shall be exclusively carried out under the land auction procedure in three stages: local, regional, and state;
  • participants must be set in the same territorial unit where the land is located. Participants’ non-compliance with the requirements shall entail their non-admission to the auction.Sole proprietors, whose main activity is agriculture, shall be entitled to participate in land auctions, and legal entities, which plan to acquire a plot, need to have the status of an agricultural producer. Herewith, the place of registration of all auction.


IT IS PLANNED TO FORMALISE EMPLOYER’S LIABILITY FOR SALARY ARREARS

The Draft Law No. 7002 of July 25, 2017 stipulates that in the event the salary payment deadlines established by the law or a collective agreement are violated, the employee shall get a compensation and a fine at the rate of 0.2 percent of the amount of arrears in income (which he/she has not received) for each day of the delay, as provided by the Law of Ukraine “On Compensation to Citizens for Losing a Part of their Income Because of Violation of Payment Deadlines”.

In case of delays in payment of salary and other sums due to the employee for a period exceeding 15 days, the employee shall have the right to temporarily suspend the performance of works for the entire period until the payment of the delayed amount, provided he/she has warned the employer in writing. The employer undertakes to pay compensation to such employee in the amount of the average daily salary for each day of suspension of performance of works.

Herewith, the employee’s temporary suspension of performance of works cannot be used as grounds for the removal of this employee from work, or his/her dismissal at the employer’s initiative.


IT IS PROPOSED TO USE THE “SINGLE WINDOW” MECHANISM IN INTERNATIONAL TRADE

Under the Draft Law No. 7010 of July 28, 2017, it is proposes to introduce a procedure for filing documents for customs clearance of goods using the “single window” method, which will ensure the full exchange of information between the declarants, bodies of incomes and fees, and other bodies performing control activities in the course of the movement of goods and vehicles across the border. The scanned copies of documents submitted by declarants have to be certified by the electronic digital signature.

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