Legislative news digest: LEGAL HOTLINE 15.08.2017

THE NEW SIZES OF CORRECTION COEFFICIENTS FOR A COLLATERAL

On August 8, 2017, the new sizes of correction coefficients for the types of assets accepted by the National Bank of Ukraine (NBU) as a collateral for the fulfilment of obligations on refinancing transactions, direct repo transactions, and transactions under the agreements on keeping cash reserves, as defined in the NBU’s Order No. 760 of August 7, 2017, came into effect. The correction coefficients for foreign currency and deposit certificates of the National Bank of Ukraine were left unchanged, that is 95% and 100%, respectively. Also, the size of the ultimate level of reduction of volume of the pledged assets (property) was approved at the level of 5%. The reduction of the fair value of a collateral within 5% will be covered by the correction coefficients.

AIR CARRIERS WERE EXEMPT FROM IMPORT DUTY AND VAT

At its meeting held on August 9, 2017, the Cabinet of Ministers of Ukraine adopted the Resolution “On Approving the Procedure and Volume of Goods Imported into the Territory of Ukraine by the Aircraft Manufacturing Entities Exempt from Payment of Import Duty and Value Added Tax”. According to provisions of this Resolution, until 2025, enterprises of the aircraft industry shall be exempt from import duty and VAT from the value of goods imported by such enterprises. Herewith, such exemption from import duty and VAT shall be applied, provided the requirements for the volume of import and proper use of goods are met. For example, resale or free transfer of components imported without payment of customs duties and VAT will be regarded as improper use.

A CREDIT DOSSIER COMPOSED OF ELECTRONIC DOCUMENTS

On August 9, 2017, the changes in the procedure for drawing up credit documents approved by the NBU’s Resolution No. 75 of August 4, 2017, came into force. Due to such changes, banks gained the right to compose a debtor’s credit dossier from electronic documents created and signed by the bank with the electronic digital signature. Herewith, the bank should further ensure that paper copies of such electronic documents are produced and certified.

THE DRAFT LAW ON PAYMENT OF TAXES FROM A SINGLE ACCOUNT

At its meeting held on August 9, 2017, the Cabinet of Ministers of Ukraine approved the Draft Law of Ukraine “On Amendments to the Tax Code of Ukraine and Certain Laws of Ukraine on Introducing a Single Account for Payment of Taxes and Dues, a Unified Tax for Compulsory State Social Insurance” of June 2, 2017 and submitted it to the Verkhovna Rada of Ukraine. According to the provisions of the Draft Law, a taxpayer will be entitled to open at his/her own will a single account at the Treasury to be used to pay taxes and dues, as well as the Unified Social Tax. Exceptions to this innovation will only include VAT and excise tax on sale of fuel. According to the Tax Code of Ukraine, there are electronic administration systems which operate for these two taxes.

A NEW MODEL OF FOREIGN CURRENCY REGULATION

On August 9, 2017, the text of the Draft Law “On Foreign Currency” was posted on the NBU’s official website. Among other things, it clarifies the concept of a new model of foreign currency regulation. The proposed approach involves the freedom to conduct foreign currency transactions based on the “everything which is not expressly forbidden is allowed” principle. The Hryvnia will remain the only legal means of payment for goods and services, but the Draft Law provides for the special use of foreign currency for investment and related transactions, as well as provision of banking services. At the same time, ensuring the observance of foreign currency legislation as a whole relies on foreign currency oversight.

DEPRIVATION OF THE RIGHT TO LAND IS POSSIBLE ONLY THROUGH COMPENSATION

On March 16, 2017, the judgment of the European Court of Human Rights of February 16, 2017 in the case of Kryvenkyy against Ukraine became final. The Court recognized that the deprivation of the right to a plot of land (share) without any compensation or other reimbursement of the value of such plot of land constituted a violation of Article 1 of the Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms. According to this judgment, Ukraine is obliged to pay EUR 10,000 to the applicant as a compensation for his deprivation of the right to land.