Legislative news digest: LEGAL HOTLINE 17.01.2018

CRITERIA FOR IDENTIFYING HIGH-NET-WORTH INDIVIDUALS WERE PROPOSED

The Ministry of Finance of Ukraine has promulgated the draft Law “On Amendments to the Tax Code of Ukraine and Certain Legislative Acts with Regard to the Criteria for Identifying Individuals with High Income”.

This draft Law proposes to introduce criteria for identifying persons with high income and provides for the obligation of such persons to submit annual tax declarations, irrespective of the fact whether they or their tax agents paid the Personal Income Tax (PIT) or military fee during the reporting period.

If the draft Law is adopted, an individual will be considered to be a payer with high income, if they meet one of the following criteria:

• This individual is an ultimate beneficial owner (controller) of a large taxpayer.

• This individual directly or indirectly owns 10% or more of the authorised capital or voting rights of the acquired stocks (shares) of a legal entity that is a tax resident of another state and declared (received) the income of EUR 10 million or more for the previous tax (reporting) year;

• This individual’s gross annual taxable income for the previous tax (reporting) year exceeds UAH 50 million.

It is proposed to establish a fine of 10% of the amount of the accrued PIT for late submission of a tax declaration by a high-net-worth individual.

THE MODEL AGREEMENT ON PURCHASE AND SALE OF ELECTRICITY FROM ALTERNATIVE SOURCES OF ENERGY WAS MODIFIED

On January 9, 2018, the National Commission for State Regulation of Energy and Public Utilities (NCSREPU) adopted the Resolution No. 1 on introducing further amendments to the Standard Agreement on the Purchase and Sale of Electric Power between the State-Owned Enterprise (SOE) “Energorynok” and Entities Producing Electricity Using Alternative Sources of Energy.

The amendments include, in particular:

• Granting the SOE “Energorynok” the right to sign direct agreements with creditors, without the prior consent of alternative energy producers;

• Granting electricity producers the right to initiate early termination of agreement in the defined events and demand compensation from the SOE “Energorynok”;

• Defining that lack of funds for any commercial, economic, or financial reasons or changes in market conditions do not belong to force-majeure circumstances;

• Establishing a general 30-day term for resolving pre-trial disputes between the parties;

• Applying a differentiated approach to the further resolution of disputes in which it was impossible to reach a consensus through negotiations, depending on the fact whether an electricity producer has foreign investors;

• Defining cases considered to be amendments to the legislation for the purposes of the Model Agreement.

THE NEW VERSION OF THE LAW ON ACCOUNTING AND FINANCIAL REPORTING

On January 01, 2018, amendments to the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” came into force. Among the most important novelties, it is worth noting the subdivision of enterprises (except for budgetary institutions) into micro-enterprises, small, medium-sized, and large enterprises. The criteria by which enterprises belong to one or another category include: the book value of assets, the net income from sales of products (goods, works, or services), and the average number of employees. If an enterprise meets at least two of these three criteria, it is considered to be an enterprise belonging to the specific category.

For the category of large enterprises, as well as for some other types of economic entities (banks, insurance companies, non-state pension funds, etc.), which are classified by the legislator as public interest enterprises, the amendments introduced additional requirements as regards the person holding the chief accountant position, as well as provided for their obligation to create an accounting service.

Also, amendments to the Law stipulate the time limits for enterprises to publish their financial reports on their own websites:

• For public interest enterprises (except for large enterprises, which are not issuers of securities), public joint-stock companies, subjects of natural monopolies on the nationwide market, and enterprises engaged in the extraction of mineral resources of national significance – not later than April 30 of the year following the reporting period;

• For large enterprises, which are not issuers of securities, medium-sized enterprises, as well as financial institutions belonging to micro-enterprises and small enterprises – not later than June 1 of the year following the reporting period.

NEW RULES OF WORKING WITH PERSONAL DATA IN 2018

As from May 25, 2018, the Regulation (EU) No. 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (the General Data Protection Regulation) will become binding on the EU countries.

The Regulation specifies and extends the rights of the subjects of personal data, in particular, the right to receive information about the personal data processing, the right to prohibit such processing, “the right to be forgotten”, etc. Also, the Regulation made a distinction between the concepts of the controller and the processor of personal data, as well as defined the basic principles and limits of their activities. The Regulation also provides for the concept of “adequate” level of personal data protection for non-EU countries, under which it is possible to transfer data without any further conditions.

Despite the fact that Ukraine is not a member of the EU, the adoption of the Regulation No. 2016/679 will have a significant impact on the activities of Ukrainian companies working with the EU residents and processing their data, as the approach to determining the operation of the Regulation is based not on the country’s territorial allegiance to the EU, but on the fact whether it processes the EU residents’ personal data.

THE FIRST APPEALS TO THE SUPREME COURT ON CONSIDERATION OF A MODEL CASE

The Kyiv Circuit Administrative Court directed two submissions to the Supreme Court as regards resolving the issue of opening proceedings in the model administrative case.

The first submission relates to the application to the Prosecutor General’s Office of Ukraine, as administrative appeals from persons, who were dismissed from office following the adoption of the Law of Ukraine “On Cleaning the Power”, are pending in the Kyiv Circuit Administrative Court.

The second submission relates to the lawsuit of the PJSC “Aeroflot – Russian Airlines” against the State Aviation Service of Ukraine, which challenges the resolutions on imposing fines in the field of civil aviation due to violations of the rules and procedures for the use of airspace of Ukraine.

Thus, according to the new Code of Administrative Legal Proceedings of Ukraine, the court that considers several model administrative cases has the right to appeal to the Supreme Court with a submission to request consideration by the latter as a court of first instance of a model case based on the file of one of such model cases.

THE “GREEN” TARIFF FOR PRIVATE HOUSEHOLDS WAS INCREASED

On January 13, 2018, the NCSREPU’s Resolution No. 1609 of December 29, 2017 “On the Establishment of “Green” Tariffs for Electricity for Private Households” came into force.

According to this Resolution, the amount of the “green” tariff for electricity for private households producing electricity from the energy of solar irradiation and wind energy was increased by 4.5%.