- Disclosure of structure and beneficial owners
- Diia city
- Restrictions on currency purchase
- Sale of land plots through electronic auction
- Launch of judicial reform in Ukraine
Disclosure of structure and beneficial owners
On July 11, 2021, the order of the Ministry of Finance of March 19, 2021 № 163 “On approval of the Regulations on the form and content of the ownership structure came into force.
Due to this document each legal entity in Ukraine shall provide to the state registrar full structure of the Company including the % of ownership and passport copy of beneficial owner(s).
The ownership structure shall be a schematic representation showing all persons who directly or indirectly own a legal entity independently or jointly with other persons.
The ownership structure should indicate the size of the participation of each of the owners, as well as indicate the persons who, regardless of formal ownership, have the opportunity to significantly influence the management or activities of the legal entity. In addition, it is necessary to indicate the description of the implementation and the nature of the decisive influence of the ultimate beneficial owner on the activities of the legal entity.
Starting from 11 July 2021 Structure and beneficial owners information shall be disclosed according to the new procedure:
- initially, within 3 months – till 11 October 2021;
- every time when carrying out state registration;
- annually (with reference to the date of registration); and
- within 30 days from the date when the related information changes.
Failure to submit, or late submission of, mentioned information may cause penalty of 17 000 UAH to 51 000 UAH.
On July 15 was adopted Law № 4303 on Diia City, which provides for the development of a virtual state for IT industry with special tax conditions.
Diia City is a project of a special legal conditions for the IT industry, which includes a special scheme of taxation and employment for IT specialists, as well as special preferences for resident companies.
Diia City is introduced as an alternative to current conditions. Participation is voluntary. The special regime will not be limited territorially, but will operate throughout the country.
Law defines the general principles of operation, including:
- freedom of activity – all residents have the right to carry out economic activities independently, as well as to choose the forms of its organization and cooperation with third parties;
- non-interference of the state – a provision on the inadmissibility of direct or indirect coercion of legal entities to acquire the status of a resident of Diia City;
- presumption of legality of residents’ activity;
- stability – the period during which the state guarantees the IT industry the invariability of the conditions of Diia City, increased to 25 years;
- the formal nature of the procedure for acquiring resident status.
New tax terms in Diia City
- personal income tax is reduced from 18% to 5%;
- a single social contribution of 22% of the minimum wage;
- the ability to choose which corporate tax to pay – income tax (18%) or tax on withdrawn capital at a rate of 9%;
- the military fee will be 1.5%.
- 0% income tax on the sale by a natural person of a share in a resident company Diia City – provided that it has owned a share for more than 1 year;
- 0% on the income of individuals in the form of dividends accrued by the resident company, provided that they are paid not more than once every 2 years;
- tax discount on Personal Income Tax on the amount of investment in Ukrainian startups.
Requirements to the residents of Diia City:
- legal entity registered on the territory of Ukraine
- carries out one or more types of IT activity, which is specified in its charter and / or information about it, contained in the Unified State Register;
- the amount of the average monthly remuneration to the involved employees and gig-specialists, is not less than the equivalent of 1200 EUR;
- the average number of employees and gig specialists of a legal entity (in case of involvement) is at least nine people;
- compliance with the requirements of the legislation on the disclosure of information about the ultimate beneficial owners and / or the provision of information about the ownership structure of the legal entity;
The concept of gig-contract is introduced in Law
Particulars of gig-contract:
- regulated by civil law
- it is a separate type of contract beside labor and Service agreement with PE
- the work under this contract is not providing of entrepreneur activity
- weekly work time shall be not more than 40 hours
- annual paid vacation is not less than 17 days
- gig-contract could be terminated by either party with 30 days prior notice. During first 3 months gig-contract could be terminated with 3 days prior notice.
Restrictions on currency purchase
From July 20, 2021 National Bank of Ukraine has lifted restrictions on the purchase of currency for business.
From the mentioned date businesses will be able to purchase currency within the limit of 100,000 EUR per day without obligation to provide justification for the purchase.
Previously, legal entities and sole proprietors could buy currency only if they had grounds or obligations. For example – to repay a loan in foreign currency or to purchase equipment abroad. From July 20, such justifications will not be required.
These changes became the next step of the regulator on the way to currency liberalization. The NBU notes that the weakening was made possible by the stability of financial markets. Accordingly, the changes will not have a significant impact on the foreign exchange market in Ukraine.
Sale of land plots through electronic auction
On June 25, 21, the Law of May 18, 2021 № 1444-IX “On Amendments to Certain Legislative Acts of Ukraine Concerning the Sale of Land Plots and Acquisition of the Right to Use Them through Electronic Auctions” enters in legal force from 06.07.21
Within 3 months from the date of its publication until September 25, 2021, the Cabinet of Ministers must develop and bring into line its regulations.
The main changes made by Law are following:
- sale of land plots of state or communal form of ownership and the acquisition of rights to use them (lease, superficies, emphyteusis) are carried out on a competitive basis (at land auctions) in the form of an electronic auction;
- sale of land plots of private ownership, their transfer for use, sale of emphyteusis rights, superficies in the form of an electronic auction is possible only at the request of the owner;
- alienation of leased land plots of state or communal form of ownership is not allowed without the consent of the tenant;
Land auctions will be conducted in an electronic trading system in real time on the Internet.
Launch of judicial reform
On June 29, was adopted Law, that restores the work of the High Qualifications Commission of Judges (hereinafter –HQCJ) and launches judicial reform in Ukraine.
According to the law, HQCJ will consist of 16 members. The HQCJ is considered authorized in a case of appointment of at least 11 members.
Law stipulates that members of the HQCJ will be selected by a competition commission of integrity, which consists of six members:
- three members must be judges or retired judges nominated by the Council of Judges of Ukraine
- for one member will be nominated by the Council of Prosecutors of Ukraine; the Bar Council of Ukraine; National Academy of Legal Science.
But the first commission of integrity will include:
- three judges
- three independent experts (experts will be nominated by international organizations that provide assistance to Ukraine in the fight against corruption).
International experts will have a decisive vote in the formation of the HQCJ.
The competition commission will hold a competition for the position of a member of the HQCJ in two stages:
- Candidates who apply first will be selected based on the results of the inspections, and then they will be interviewed and recommended to the High Council of Justice.
- The members of the tender commission will be appointed by VSP.
At the request of the tender commission, additional specialists and experts from international and foreign organizations may also be involved in the tender.
This information is a general overview and is not prepared to be a legal, accounting or other guidance. Feel free to contact us for the individual consultation.
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