Legislation Overview (February 2018)

Taxes

VAT

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Procedure for Granting the Payment of Value Added Tax and Application of Enforcement of Obligations for Importation to Ukraine’s Customs Territory of Equipment for Own Production in the Territory of Ukraine” of 07.02.18, No. 85 approved the Procedure for Granting Deferral of Payment of the value-added tax and the enforcement of obligations when importing into Ukraine’s customs territory equipment for own production in the territory of Ukraine.

In order to receive an instalment payment for the value added tax (hereinafter − VAT), the importer must submit to the customs, in particular, the corresponding application; a business plan or other document that describes the process of economic calculations and expected results of the activity; conclusions of state bodies or export institutions confirming the availability of production facilities, etc.

The decision to grant instalments of VAT when importing equipment for own production will be accepted by the customs according to the recommendation of the special commission. The controllers have 10 working days from the date of receipt of the application for reflection. In particular the commission will inspect during this period:

• the conformity of the equipment specified in the application with the Ukrainian Commodity Code of Foreign Economic Activity from para.65 of the sub-sec. 2 of sec. XX of TCU, which gives the right to such an instalment;
• the confirmation of the cost of the equipment specified in the application;
• the confirmation that the equipment does not originate from the country recognized by the invading state or is not imported from the territory of such country;
• the absence from the importer of tax arrears, fees;
• the confirmation of the availability of production facilities or premises or conditions for the registration and storage of goods, finished products, etc.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the formation of tax obligations and tax credit in the case of supply of goods/services with payment at the expense of budgetary funds” of 12.02.18, No. 576/6/99-99-15-03-02-15/ПК reminded of VAT-specifics during the delivery of goods/services at the expense of budgetary funds. In this case, the supplier pays tax obligations on the date of receipt of payment to the account or on the date of receipt of other types of compensation, including reduction of its debt to the budget. But the general tax rules apply to display a tax credit. In this case, the supplier pays tax obligations on the date of receipt of payment to the account or on the date of receipt of other types of compensation, including reduction of its debt to the budget. But the general tax rules apply to display a tax credit. Thus, for purchases bought for budget funds or intended for deliveries, for which payment will come from the budget, the tax credit is increased by the rule of the first event.

According to the interpretation of the concept of “budgetary funds”, representatives of the fiscal department directed the taxpayer to the Budget Code of Ukraine.

The State Fiscal Service of Ukraine in its letter “On the peculiarities of the VAT taxation of medical devices” of 05.02.18, No. 3375/7/99-99-15-03-02-17 reported that medicines and medical devices purchased /imported before 01.01.18 with a 20% VAT, a tax at a rate of 7% in 2018 can be accrued.

At the same time, it is not necessary to adjust the tax credit.

In addition, representatives of the fiscal department described the peculiarities of the application of the 7% VAT rate during the delivery of medicines and medical devices. It should be reminded that earlier the list of medical devices was approved by the Cabinet of Ministers, however from 01.01.18 the TCU provides for other conditions for application of the 7-percent rate.

Supply and import of medical devices are subject to a 7% VAT, if they:

• are allowed to be placed in the market and/or put into operation and use in Ukraine;
• are entered into the State register of medical equipment and medical products or meet the requirements of the relevant technical regulations, which are confirmed by the compliance document.

If at least one of the above conditions is not fulfilled, the supply of medicines and medical devices is taxed at a rate of 20% VAT.

Corporate Income Tax

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Enrolment of prepaid advance payments of the income tax during the tax period in reducing the positive value of the tax liability of future reporting periods” of 31.01.18, No. 370/6/99-99-15-02-02-15/ІПК reminded: if the amount of the dividend advance paid in the reporting period exceeds the amount of the accrued tax liability of the enterprise issuing corporate rights for such tax (reporting) period, then the amount of this excess is transferred to the reduction of tax liabilities of the following tax (reporting) periods to its full repayment.

Thus, in the case of the results in 2017 or subsequent periods of a positive value of tax obligations on the income tax, the taxpayer has the right to reduce such amount to “non-paid” paid dividend advances during the last reporting period.

The amount of the advance payment accrued and paid in connection with the payment of dividends should be reflected in line 16.4 of ЗП application to the Tax Declaration on Company Income Tax, approved by the Order of the Ministry of Finance of Ukraine dated 20.10.15, No. 897.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the taxation of payments to a non-resident upon repayment of a bill” of 18.08.17, No. 1675/6/99-99-15-02-02-15/ІПК reported that the income of a non-resident – payee of bill in the form the amount of the discount during the repayment of the bill by the resident should be taxed as other non-resident income from the source of origin from Ukraine (para.“й” of para. 141.4.1 of the Tax Code of Ukraine, hereinafter − TCU).

That is, a resident of Ukraine during the repayment of a bill must withhold and pay a 15% tax in accordance with para. 141.4.2 of TCU, unless otherwise stipulated by the provisions of international treaties of Ukraine with the countries of residence in favour of which the payments are made.

PIT and War Tax

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Taxation of Roaming Services” of 30.01.18, No. 354/6/99-99-13-02-03-15/ІПК clarified: if the employer pays for the roaming service, which provided by the operator of mobile communication to the employee, then the value of the said service includes the total taxable income of the employee as an additional benefit and tax personal income tax and military fees on a general basis. Representatives of the fiscal department refer to para. “г” of para. 164.2.17 and para. “е” of para. 164.2.17 of TCU, according to which, it is included to the additional benefit, the amounts of monetary compensation of the taxpayer’s expenses and the value of services received free of charge.

It should be noted: that the consultation does not determine the purpose for which the employee uses roaming - personal or industrial, but fix that the roaming service is provided directly to the employee (and not the employer).

In the category 103.02 “ZIR” on the question about the taxation of income from the cost of telephone conversations of employees in roaming paid by the employer, the tax respondents replied: “if the mobile phone, which is recorded on the balance of the legal entity (employer), the employee is engaged in industrial conversations, then the cost of these conversations is not considered as an additional benefit of the employee”.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On taxation of income received by an individual in the form of a gift from a legal entity” of 02.02.18, No. 439/6/99-99-13-02-03-15/ІПК clarified: if the value of gifts exceeds 25% of one minimum wage, their entire value is taxed by the personal income tax (hereinafter − PIT) as an additional benefit, taking into account the provisions of para. 164.5 of the TCU.

It should be recalled: para. 165.1.39 TCU establishes a list of incomes that are not included in the calculation of the total taxable income of the taxpayer, including the value of gifts (as well as prizes to winners and prize-winners of sports competitions), if it does not exceed 25% of one minimum salary established on January 1 of the reporting year (in 2018 − UAH 930.75), with the exception of cash payments in any amount.

Previously, the SFSU explained that in the case when the value of the gift exceeds the specified amount, the amount of excess should be taxed (the SFSU letter dated 24.02.17, No. 2985/5/99-99-13-02-03-16). Regarding the maintenance of the war tax, the representatives stated: “if the value of the gift, <...> does not exceed 25% of one minimum wage (per month), established on January 1 of the reporting tax year (in 2018 − UAH 930.75), <...>, it is not the subject to taxation by the war tax. In case if the value of the gift exceeds the specified amount, the amount of such excess should be taxed by the war tax as an additional benefit” (category 132.05 “ZIR”).

It is unknown why the SFSU suddenly changed the approach to the interpretation of para. 165.1.39 of TCU, but for enterprises that acted in accordance with previous explanations, it can result in additional accrual of the income tax and the war tax.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Dividend Taxation” of 29.11.17, No. 2758/6/99-99-13-02-03-15/ІПК clarified the procedure for taxation of dividends paid by a resident of Ukraine to an individual − resident of Germany (subject to the provisions of the international agreement). According to the representatives of the fiscal department, in Ukraine such dividends are taxed by the income tax at a rate of 5% and the war tax at a rate of 1.5%.

At the same time, when the payment of dividends to a non-resident-individual, the repatriation tax under para. 141.4.2 of TCU is not withheld.

Simplified Tax System

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the possibility of a payer of the unified tax to be the manager of real estate” of 31.01.18, No. 374/6/99-99-12-02-03-15/ІПК reported that a legal person - a payer of the unified tax of the 3^rd group has the right to be the property manager in accordance with the property management contract. But only on condition that the requirements of the Tax Code of Ukraine (hereinafter − TCU) are complied with (in the part of taking the contract for accountancy, registration of the manager by the value added tax payer (hereinafter − VAT) and application of the rate of the unified tax in the amount of 3%). In addition, he/she may simply provide property management services under a relevant contract.

All profits should be taxed by the unified tax and, if any, the payment for management of the property received by the beneficiary as a result of operations with this property. In the case of entering into an agreement under which the “estate manager” provides property management services and receives remuneration for it, the income of the payer of the single tax includes the received fee for property management services.

Accounting and Reporting

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for Submission and Registration of a Declaration of Conformity of the Material and Technical Base of the Subject of the Entrepreneur to the Requirements of Fire Safety Legislation” of 14.02.18,

 No. 80 introduced adjustments to the Procedure for Submission and Registration of the Declaration of Material and Technical Compliance base of the business entity to the requirements of the legislation on fire safety, approved by the resolution of the Cabinet of Ministers of Ukraine dated 05.06.13, No. 440.

From now on, a business entity will have to submit a more detailed Declaration of Conformity of the Material and Technical Base to the requirements of the legislation on fire safety for the start-up of newly created enterprises or the commencement of the use of real estate objects.

In particular, it should be told in the Declaration in what condition the automatic fire protection installation (if any required) are, the name of the organization, the date and license number of the entity that carries out maintenance and monitoring of the systems, who and when the acceptance certificate is signed. If the systems of internal and external fire water supply are available, in what condition they are and who they are serviced, etc.

The completed Declaration can be sent by registered mail at the location of the property to the administrator of the administrative service centre or the State Service of Ukraine for Emergency Situations (hereinafter − SSUE), or through the Unified State Portal of Administrative Services, in particular through Integrated Services information system of SSUE.

The State Fiscal Service of Ukraine by its letter “On registration of incoming documents for registration, sealing and commissioning of cash register” of 17.01.18, No. 1422/7/99-99-08-01-03-17 reminded how should be carried out the registration of documents submitted by the business entities to the SFSU in order to register, seal, and put into operation the cash register.

In order to register a cash register, the company submits to the controllers a statement of f. No. 1-РРО together with all necessary copies of documents. The mentioned application and documents are accepted by the SFSU units that are responsible for registering of cash registers.

After this, the tax authorities need to provide a certified copy of the certificate of sealing of the cash register and the act of its commissioning, which are issued by service centres.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Recognition of Accounts Receivable as Bad Debt” of 24.01.18, No. 269/6/99-99-15-02-02-15/ІПК clarified when the funds held on the current bank account that was liquidated could be considered as a bad debt for tax purposes.

The main condition for meeting such indebtedness with bad debt according to 14.1.11 of TCU is the presence of a record in the USR on the state registration of the termination of such a legal entity. That is, the corresponding document confirming the termination of the debtor’s bank as a legal entity in connection with its liquidation.

In the presence of such a confirmatory document, a company that applies correctional differences may reduce the financial result in accordance with para. 139.2.2 of TCU.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the availability of the commercial invoice and the formation of expenses by the taxpayer for the profit in the absence of the commercial invoice” of 05.02.18, No. 464/6/99-99-15-02-02-15/ІПК reported: if the terms of delivery of the goods provide for payment of transport costs by the buyer-resident of Ukraine, such costs should be included in the customs value of the goods.

After import of such goods into the customs territory of Ukraine, transport costs are excluded from the cost of goods provided that these costs are:

• included in the price of goods;
• documented (there is an invoice, an act of work performed (services rendered), bank and payment documents (or costing transportation costs);
• calculated.

At the same time, in the case of customs clearance of goods, documents for confirmation of transportation costs should be based on the data of accounting both the recipient and the carrier of goods.

The State Fiscal Service of Ukraine in its Individual Tax Advice reported: if the unified tax payer applying a cash register ceases to operate, then in case of repeated registration by the unified tax payer, he/she is obliged to apply a cash register in all subsequent tax periods during his/her registration, regardless of the amount of income.

It should be recalled that according to para. 296.10 of TCU, the unified tax payers begin to apply the cash register from the first day of the first month of the quarter following the quarter in which the volume of its income exceeded UAH 1 million. And they continue in all subsequent tax periods during the registration of a business entity as the unified tax payer.

After re-registration, a new entity appears, which, before reaching the income limit of UAH 1 million, is not obliged to apply a cash register (except for sellers of complex household goods).

Control and Responsibility

The President of Ukraine signed the Law of Ukraine “On Audit of Financial Reporting and Auditing” of 21.12.2017, No. № 2258-VIII, which will enter into force on 01.10.18. It, in particular, stipulates:

• establishing a Public Oversight Body that will oversee the quality of the audit services provided;
• increasing the requirements for auditors who will check the enterprises of social importance;
• establishing a new procedure for certification of auditors;
• introduction of a mechanism for insurance of professional liability of auditors to third parties;
• creation of a single register of auditors and audit entities.

The President of Ukraine signed the Law “On Amending Certain Legislative Acts of Ukraine regarding Corporate Treaties” of 23.03.17, No. 1984-VIII, which launches in the state a mechanism for concluding corporate agreements between founders of economic partnerships.

Such agreements expand the possibilities for the founders to implement their corporate rights. In particular, the contract may provide for:

• the obligation of its parties to vote in a manner determined by such agreement, at the general meeting of the participants (founders) of the economic partnership;
• agree on the acquisition or alienation of a share at a predetermined price and / or in the event of circumstances specified in the contract to refrain from alienation of shares before the circumstances specified in the contract;
• make other actions related to the management of a business company, its termination or separation from it of a new legal entity.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to certain Resolutions of the Cabinet of Ministers of Ukraine” of 14.02.18, No. 76 brought in accord some normative acts with the norms of the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on Enhancing the Protection of the Right of the Child to Proper Maintenance by Improving the Forced collection of arrears of alimony payments” (hereinafter − the Law on the payment of alimony).

Thus, the Regulation on the procedure for issuing driver’s licenses and the admission of citizens to the management of vehicles was amended. In particular, regarding the temporary limitation of the right to drive a car for owners, who have arrears of alimony.

The changes also affected the Rules of crossing the state border by citizens of Ukraine and the Procedure for registration, issuing, exchanging, sending, withdrawing, returning to the state, invalidating and removing a passport of a citizen of Ukraine for travelling abroad.

It is now determined: in case of presentation of a certificate of arrears of maintenance payments, the aggregate amount of which exceeds the amount of payments for six months, registration, exchange and issuance of a passport for travelling abroad, as well as departure from Ukraine of citizens who have not reached the age of 16, carried out without the consent of the second parent.

As for non-payment of alimony, other methods of influence are also provided. Those who do not pay maintenance for more than six months, it is planned:

• deprive the right of departure abroad to the liquidation of the debt;
• temporarily deprive of the right to use weapons and to hunt;
• bring them to make publicly useful works, and payment for it should be transferred for the debt of child support payment.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Resolution of the Cabinet of Ministers of Ukraine dated February 8, 2017 No. 77” of 07.02.18, No. 50 prolonged the operation of the Procedure for using funds provided for in the state budget for financial support of agricultural producers. In particular, the reference to 2017 is excluded from the said Order.

The decision was made in compliance with the provisions of the Budget Code of Ukraine and the Law of Ukraine “On the State Budget of Ukraine for 2018”. This will allow you to direct budget funds in 2018 to:

• a budget subsidy for the development of agricultural producers and stimulation of agricultural production.
• partial compensation of the cost of agricultural machinery and equipment of domestic production.

The Government also assumes that the allocation of funds for these areas will be approved by the Ministry of Agrarian Policy.

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Procedure for Using the Funds Provided in the State Budget for Implementation of Measures to Ensure Domestic Production of Coal Products and Further Reforms of the Public Sector of the Coal Industry” of 07.02.18, No. 63 approved the procedure for using the funds provided in the state budget under the program “Implementation of measures to ensure domestic production of coal products and further reform of the state sector of the coal industry”. Funds will be provided to coal-mining enterprises of state ownership or coal mining companies, 100% of which are owned by the state (except for bankrupt enterprises).

Use of funds is necessary for the payment of wages and the modernization of technical equipment.

In order to receive irretrievable financing, coal-mining enterprises should submit to the Ministry of Energy and Coal a forecast of technical and economic indicators of activities and a plan of measures aimed at improving production performance and reducing the cost of commodity coal products. The Ministry of Energy and Coal will consider and distribute them in accordance with the approved procedure.

The Ministry of Justice of Ukraine launched the unified register of non-payment of alimony. This is reported on the Government portal. All non-payers of alimony will fall into this category, and its information is open and accessible to everyone.

 In addition, starting February 6, new leverage will be applied to malicious non-payers of alimony, that is, those who have owed alimony for the amount of 6 months. Namely:

• their administrative responsibility to be strengthened;
• a temporary restriction was imposed on the personal non-property rights of the debtor: the right of departure outside Ukraine, the right to drive vehicles, the right to hunt, the right to use firearms hunting, pneumatic and cooled weapons, devices for shooting cartridges equipped with rubber or similar in their properties, metal non-lethal projectiles.

The Ministry of Agrarian Policy and Food of Ukraine by its Order “On approval of unified forms of acts, which were prepared on the basis of planned (unscheduled) measures of state supervision (control) in the areas of seed and seedling, protection of rights to plant varieties” of 29.12.17, No. 709 approved unified forms of acts, which are made on the basis of planned (unscheduled) inspections in the spheres of seed and seedling, protection of rights to plant varieties.

The forms of documents contain a list of issues that will be of interest to the controllers of the State Committee for Consumer Goods and Consumer Protection. In particular, in the field of seed and seedling, it will be checked whether the business entity:

• included in the Register of seed and seedlings subjects;
• produces seeds or seedlings;
• observes the proprietary rights of intellectual property to a plant variety under such production;
• not included in the Register, but realizes seed and planting material in the presence of certificates and observes the proprietary rights of intellectual property to plant varieties;
• keeps the packaging, labelling, transportation and storage of seeds;
• preserves duplicates of seed samples and seedlings during the validity period of the certificate;
• maintains and keep seed documentation for each variety;
• adheres to the procedure for coordinating the location of seed crops, etc.

In the field of plant variety rights, it will be checked whether the company complies with:

• personal non-proprietary right of authorship to a plant variety;
• proprietary intellectual property rights for plant varieties and distribution of the variety;
• rights of prior use;
• order of acquiring rights to a plant variety;
• transfer (alienation) of property rights to a variety;
• right to use the variety;
• liabilities of use of the name of the variety, etc.

The State Financial Monitoring Service of Ukraine by its Order “On Approval of the Types of Legalization (Laundering) of the Proceeds from Crime, Terrorist Financing and Financing the Spreading of Weapons of Mass Destruction in 2017” of 22.12.17, No. 186, approved the typology of legalization (laundering) of proceeds from crime by terrorist financing and financing the spreading of weapons of mass destruction in 2017. This document should be useful to the subjects of financial monitoring (first of all − financial institutions), which monitor the operations of money laundering and the financing of crime and terrorism.

Among other things, there are indications of schemes for the illegal transfer of cashless cash, as well as in general for money laundering schemes and terrorist financing.

As for the participants of the financial transactions:

• registration of the company on the nominee name (without a certain place of residence, mentally ill, students, elderly people, foreigners, convicts, deceased persons, under purchased, stolen or lost documents);
• one person alone is the founder, manager and accountant of the company (sole founding staff);
• founders are persons living in a region that is different from the region of registration of the subject;
• founders are those registered in uncontrolled territories of Ukraine or in the zone of delimitation of the conflict (ORDLO zone);
• frequent change of founders, owners, officials of the subject of business, impossibility of establishing the location of officials (manager, chief accountant);
• small authorized capital;
• offices of business entities are registered at the place of mass registration of such entities;
• coincidence of the registration address of participants in transactions;
• newly created business entities (so-called “one-day”, “holes”, “butterflies” tend to be within the same tax period, which complicates the ability to control their activities);
• business entities submit tax reporting with a minimum income or high income, but with a negligible amount of taxes paid.

Regarding financial and economic activity of participants of financial transactions:

• daily turnover of funds is usually increased at the end of the week, or there is no money left in the day-to-day or morning everyday or their amount is substantially reduced;
• presence of a large number of signed forms of the same type of contracts for the execution of works or services, estimates, acts of acceptance, etc.;
• use of multilateral payments and payments with a large number of participants in such transactions, located in different territorial units or registered at one address;
• lack of cash flow of an entity on bank accounts or very large volume of financial transactions of a newly created company.

Regarding the content of financial transactions:

• confusing or unusual nature of a commercial transaction that has no economic sense or obvious legitimate purpose;
• inconsistency of the transaction of the entity’s business, stipulated by the statutory documents;
• large amount of cash received from commercial activity, which is not characterized by the intensity of cash transactions;
• payment of a penalty (fine) for non-performance of the contract of delivery of goods (performance of works, provision of services) or for violating the terms of the contract, when the amount of the penalty exceeds 10% of the amount of non-delivered goods (unexecuted works, unsatisfactory services);
• amounts on which financial transactions do not correspond to the property (financial) state of the client.

Labor and Salaries

The Ministry of Social Policy of Ukraine in its letter “On the provision of material support to persons who work under the civil-law agreement” of 17.12.17, No. 571/0/86-17/218, addressed to the Executive Directorate of the Social Insurance Fund of Ukraine, clarified, how to determine the average daily income for the calculation of the leave allowances for individuals with whom civil-law agreements have been concluded (hereinafter − CLA).

It should be recalled that since October last year, according to Art. 30 of the Law of Ukraine “On Compulsory State Social Insurance” of 23.09.99, No. 1105-XI, persons who work under the conditions of the CLA, have the right to material security and social services for insurance in connection with temporary incapacity for work.

The Ministry of Social policy notes that the calculation of the average daily income for the calculation of insurance payments to persons who work under a civil-law agreement can be carried out in accordance with the first paragraph of paragraph 2 and paragraph 3 of the Procedure for calculating the average wage (income, money supply) for the calculation of payments for compulsory state social insurance, approved by the CMU resolution No. 1266 of 26.09.01 (hereinafter − Order No. 1266), at the place of carrying out activities under the terms of a civil contract, during which insured event occurred.

If the insured person simultaneously carries out several types of activities (works under the terms of an employment contract, a civil-law agreement, is an individual-entrepreneur, etc.), in the opinion of the department, the calculation of the assistance must be carried out separately for each place of business in the same way as it is defined in para. 30 of the Procedure № 1266 for persons who work part-time.

The average income for the calculation of pregnancy and maternity benefits and temporary disability benefits is calculated by the policyholders on the basis of the data of reporting from USC, so the calculation of these amounts should be made after submission of the said reporting.

The Ministry of Social Policy notes that the legislative changes in the right to material support and social services of insured persons who work under the conditions of the CLA, as well as other categories of persons who are obliged to pay the unified contribution, should be taken into account when preparing the project management by the executive directorate of the normative − legal acts on mechanisms of insurance payments to insured persons.

The Ministry of Social Policy of Ukraine in its letter “On the reduction of work on pre-holiday day with part-time work” of 22.12.17, No. 2960/0/107-17/284, noted that the reduction of work before holidays is provided for only for workers with the established norm of working time − 40 hours a week. This is explained by the fact that reducing the number of hours worked on the eve of the holiday for part-time workers will inevitably lead to a reduction in wages.

At the same time, the Ministry of Social Policy notes: if an employee has a part-time week and on a pre-holiday day the length of his/her working hours is 8 hours, then it's still advisable to reduce the length of work by one hour this day.

The Ministry of Social Policy of Ukraine in its letter “On the payment of salary to the employee (monthly tariff rate) in the case where he/she has not worked the monthly labor rate” of 27.12.17, No. 2993/0/101-17 explained how to calculate the basic salary per month, if the employee with the established monthly salary did not work out norms. Therefore, in this case, remember the following:

• if the person did not work for several working days, then the calculation should be made taking into account the amount of daily earnings and the number of days actually worked (i.e. the salary is divided into the normal days and multiplied by the actual days worked);
• if the employee did not work for several hours (for example, he/she was late for work), then the calculation is made on hourly earnings, that is, the salary is divided into the monthly rate in hours and multiplied by the actual hours worked.

It should be recalled that official salary is the amount that has to be accrued for the worked monthly working hours, and therefore, in the case of failure of the latter, a proportional calculation is required.

The Ministry of Social Policy of Ukraine in its letter “On the definition of the day of dismissal under a fixed-term employment contract” of 05.01.18, No. 9/0/22-18/134 clarified the procedure for termination of the fixed-term employment contract in case if its last day falls on the weekend.

According to representatives of the department, the employer must fulfil the duty established by Art. 47 of the Code of Labor Laws of Ukraine (hereinafter − the Labor Code) (to calculate with the employee in due time and issue a work book to him/her on the day of dismissal) on the last working day. At the same time, the day of dismiss in accordance with part two of Art. 2411 of the Labor Code will be the last day, determined by a fixed-term employment contract.

The State Service of Ukraine on Labor Issues in its letter “On the conditions for the provision of childcare leave for the child aged under six” of 11.12.17, No. 5605/4/4.7-ЗВ-17 clarified the conditions under which for childcare leave for the child aged under six, and what documents should be submitted for such a leave.

It should be recalled that this leave is provided on the basis of para. 3 of sec. 1 of Art. 25 of the Law of Ukraine “On Holidays” of 15.11.96, No. 504/96-ВР in case if the child needs home care, the duration specified in the medical report, but not more than until the child reaches the age of six, and if the child a patient with type 1 diabetes (insulin dependent) − not more than until the child reaches the age of 16 years, and when the child gets the category “disabled child of subgroup A” − the child aged under 18 years.

The leave is provided without salary wage.

The State Service on Labor Issues notes that in order to receive childcare leave for the child aged under six, the following documents should be submitted:

• a statement addressed to the employer or an authorized person;
• certificate in the form No. 080-1/о;
• birth certificate of the child.

The certificate in form No. 080-1/o is issued for a term of six months − in view of the nature and course of the child’s illness. Accordingly, after the expiration of the period for which the certificate was issued, a person who wishes to remain on leave for childcare must receive a new certificate for a new term.

The said certificate may be issued by children’s polyclinics, centres of primary health care, children’s homes, and health facilities, which provide outpatient and polyclinic care, which includes children’s departments where the child is accounted, the State Labor Office emphasizes.

Controlled Transactions

The State Fiscal Service of Ukraine in its individual tax advice “On the definition of related persons in order to recognise certain transactions as controlled” of 18.01.18, No. 204/6/99-99-15-02-02-15/ІПК explained the nuances of the definition of related persons with purpose to recognise economic transactions as controlled between them in accordance with Art. 39 of the Tax Code of Ukraine (hereinafter − TCU).

In the request of the profit-maker, it was reported that the individual − the director of the resident company owns the corporate rights of a non-resident legal entity in the amount of 24%.

The representatives of the fiscal department replied: if the individual is an official (director) of a resident, directly owns the corporate rights of a non-resident legal entity in the amount of 20% or more, then such legal entities (residents and non-residents) are considered to be related.

Thus, under the definition of controlled subject taxpayer with counterparty − non-resident − a related party, provided that the taxpayer’s annual income from any activity exceeds UAH 150 million (excluding VAT) and the volume of transactions between contractors for the year exceeds UAH 10 million (excluding VAT).

Financial Market

The National Bank of Ukraine adopted its Resolution “On Amendments to certain legislative acts of the National Bank of Ukraine” of January 25, 2018, No. 7, which improved the conditions for the sale of foreign currency to clients of banks in the interbank foreign exchange market.

The Resolution clearly specifies the right of the client to apply for the sale of foreign currency to any authorized bank of their choice (regardless of the current currency account opened in this bank).

In addition, the NBU clarified the terms of sale of foreign currency of clients by the bank. As before, the authorized bank is obligated, on the instructions of the client, to sell its own funds in foreign currency no later than five banking days from the date of writing off these funds from the current account of the client opened in this bank. The National Bank specified that if the funds for sale are transferred by the client from another authorized bank, the sale of this currency is carried out within five days from the day of the transfer of such funds to the correspondent account of the authorized bank.

The National Bank of Ukraine by its Resolution “On the implementation of currency transactions for credits, loans borrowed from non-residents under certain conditions” of 15.02.18, No. 12 extended the possibility for banks to attract the so-called “synthetic” credits and loans in the national currency from non-residents (i.e. credits and loans which actual currency is hryvnia, and all payments between the creditor and the borrower are conducted exclusively in foreign currency).

By this time, Ukrainian borrowers could have borrowed such loans only if the non-resident lender was an international financial organization (hereinafter − IFO) (Ukraine is a member of which or on which it has undertaken to provide a legal regime).

From now on, the borrowing banks can attract “synthetic” credit and loans in hryvnia from any non-resident creditors, and not just from the IFO.

According to the NBU, the Ukrainian banks will use the funds received to lend Ukrainian borrowers in hryvnia. Such a mechanism will avoid currency risk, as it will be used by the non-resident lender of the Ukrainian bank.

Securities Market

The National Securities and Stock Market Commission (hereinafter − NSSMC) adopted the Resolution “On Approval of the Procedure for Supervision of the Registration of Shareholders, holding of general meetings, voting and summing up its results at the general meeting of joint stock companies” of 19.12.17, No. 904 approved new rules of supervision by registration of shareholders, holding of general meetings, voting and summing up of its results.

Such supervision will be carried out by representatives of NSSMC. A control group will be formed for this purpose.

In case of need, such joint stock company will be notified in writing before the registration of shareholders for participation in the general meeting on the appointment of representatives of the NSSMC. If it is convened an extraordinary general meeting of shareholders who own 10% or more of the company’s ordinary shares, they will also notify the depositary institution.

During the supervision, the NSSMC representatives have the right to:

• enter without hindrance the places where the general meeting is held, the registration of shareholders, the voting and summing up of its results, on the official identity card;
• access to documents and other materials necessary for supervision;
• require the submission of written explanations, documents (duly certified copies), extracts, extracts from the relevant documents required by the NSSMC at the time of supervision, and other information in the officials of the joint-stock company and/or persons authorized to convene a general meeting, holding registration of shareholders (their representatives), holding of general meetings, voting and summarizing of its results at general meetings of joint-stock companies and / or shareholders (their representatives) in connection with the implementation of their supervisory powers.

Information on the results of the supervision carried out, in particular the list of violations detected, recommendations on preventing violations of shareholders’ rights during the registration of shareholders, general meetings, voting and summing up of its results at general meetings, within 10 working days from the date of supervision, should be sent to the joint-stock company and/or the depositary institution.

The Other Things

The Cabinet of Ministers of Ukraine by its order “On Approval of the Export Strategy of Ukraine (Roadmap for Strategic Trade Development) for 2017-2021”of 27.12.17, No. 1017-р approved the Export Strategy of Ukraine: Road Map for Strategic Trade Development for the period 2017-2021. Thus, in the next four years, the Government has taken the following objective in the context of export support:

1. Creation of favourable conditions that stimulate trade and innovation to diversify exports.

In order to achieve a defined goal it is provided:

• strengthening of integrated institutional framework for stimulating innovation;
• strengthening of innovative potential of enterprises;
• improvement of legal and economic conditions for trade.

2. Development of business and trade support services that can increase the competitiveness of enterprises, in particular small and medium enterprises.

Achievement of a defined goal is provided due to:

• improving the coordination mechanism of the trade support institutions involved in the implementation of trade policy and export development;
• strengthening the network of institutions that provide exporters with support for business and trade.

3. Improvement of the skills and competences of enterprises, in particular small and medium enterprises (entrepreneurship), necessary for participation in international trade.

In order to achieve a defined goal it is provided:

• stimulation of entrepreneurship among owners and employees of enterprises, in particular small and medium enterprises, and youth;
• improvement of managerial skills among employees of existing enterprises, in particular small and medium enterprises (entrepreneurship);
• ensuring that the educational system meets the needs of enterprises, in particular small and medium enterprises (entrepreneurship).

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to paragraph 1 of the Procedure for the Referral of Children to Children’s Recreation and Recreation Facilities at the Expense of State Budget Funds” of 31.01.18, No. 42, which changed the Procedure for sending children to health care and recreation facilities at the expense of the state budget.

In particular, the list of categories of children who require special social attention and support is expanded. From now on, children who live in settlements located on the line of collision, native children of parent-parents or adoptive parents living in one family-type home or in one foster family, children taken into account due to difficult life circumstances will have the right to receive a privilege trip to children’s recreation facilities.

In addition, children with disabilities, children living in settlements on the line of collision, and children who are registered due to difficult life circumstances, now have the right to rest at the expense of the state budget as a matter of priority.

The Ministry of Foreign Affairs of Ukraine issued its Order “On Approval of the Requirement for the Issue of Visas in Electronic Form” of 18.12.17, No. 558, which will permit the issuance of visas electronically. That is, registration of an e-visa will be carried out remotely via the Internet at the website of the Ministry of Foreign Affairs of Ukraine.

An E-visa will be issued as a one-time entry for entry into Ukraine with a business or tourist purpose for a period of 30 days or for a period specified in the documents, which is the basis for its registration, but not more than for 30 days.

A foreigner will be able to apply for a visa no earlier than three months and no later than 10 working days before the scheduled trip begins.

In order to obtain a visa it is necessary:

• to register in on the Ministry of Foreign Affairs website;
• to fill in a visa application form and upload a photo;
• to attach scanned copies:
• pages of personal data of the passport document;
• a valid health insurance policy covering the cost of at least 30,000 euros or equivalent in another currency, unless otherwise provided by law or international treaties of Ukraine;
• a document confirming the availability of sufficient financial support for the period of the planned stay and for returning to the state of origin or transit to a third state or the possibility to obtain sufficient financial support legally in the territory of Ukraine;
• a document confirming the business or tourist destination of the trip (in Ukrainian or English);
• to pay a consular fee online through the Foreign Ministry website.

Consideration of the visa application will not exceed nine business days.

An issued e-visa will be sent to a foreigner at the registration address on the website of the Ministry of Foreign Affairs of the e-mail address.