Law Digest
Public Procurement
The On Public Procurement Act of Ukraine of 30 November 2015 (Draft Act No. 3559, submitted by the Cabinet of Ministers of Ukraine) was adopted on 25 December 2015.
The Act regulates a procurement made from UAH 50,000 to the procurement limits in order to contribute to the transparency of use of public funds.
Introduction of the system of electronic procurement and electronic appeal is aimed at increasing competition in the sphere of government procurement and reducing corruption.
Electronic procurement procedures will provide for fast documentation and information exchange, access to the proposals of the participants after completion of the auction in an open bidding will create the electronic procurement model with the participation of the state and private business.
The Act provides that government procurement is made with the application of two competitive procedures of regulation: an open bidding and a competitive dialogue as well as an uncompetitive one, namely, a negotiated procurement procedure. The open bidding is conducted with an obligatory auction at the lowest price taking into account non-price criteria. The procedure of the competitive dialogue is applied, if: a customer cannot define necessary technical and qualitative characteristics and works or type of services; to take an optimal decision on procurement it is necessary to conduct negotiations with participants (the subject of the procurement involves advisory and legal services, development of information systems, software, carrying out scientific research, etc.). The negotiated procurement procedure is conducted without prior publication (only a note on intent to conclude an agreement after negotiations with the participant of the procedure is made public).
The Act also provides an opportunity to establish centralized procurement organizations (hereinafter — CPO), which are legal entities designated by the Cabinet of Ministers of Ukraine, Council of Ministers of the Autonomous Republic of Crimea, local self-government bodies, customers responsible for the organization and conduct of procurement including procurement under framework agreements in the customers’ interests according to the Act. The peculiarities of establishing CPOs and their activities, as well as the conduct of procurement under framework agreements are resolved by the Cabinet of Ministers of Ukraine. The establishment of such organizations will contribute to an increase in the efficiency of government procurement and to savings in the government sector.
At the same time, the Act regulates the procurement made by individual economic entities, for which reason the On Peculiarities of Procurement in Certain Spheres of Economic Activity Act of Ukraine is cancelled. The Act shall come into force on a step-by-step basis, being applied for all central executive bodies and entities which act in certain spheres from 1 January 2016, and for all customers — from 1 January 2017.
Quorum of general meetings of limited liability companies reduced
On 13 December 2015 the Act of Ukraine On Amendments to Article 60 of the Act of Ukraine on Economic Partnerships regarding Reduction of Quorum of General Meetings of Participants of Limited Liability Companies of 24 November 2015, No.816-VIII came into effect, reducing the number of votes of the company’s participants necessary for the presence of a quorum at the general meeting from 60% + 1 vote to 50% + 1 vote.
From now on, all limited liability companies with a quorum not designated by the statute or designated therein as required by the law, shall have their quorum automatically reduced to 50% + 1 vote. If the current version of the company’s statute (except for the companies whose statutory capital includes a share held by the state) clearly designates the quorum of the general meeting of participants to be 60% + 1 vote, the quorum remains unchanged.
The statute of the company (except for the companies whose statutory capital includes a share held by the state) can designate an alternative (smaller or larger) percentage of votes of participants to constitute a quorum. Thus, from now on, the participants of the company have the right to independently come to an agreement about the requirements for the quorum of general meetings. To implement such an agreement the participants need to introduce appropriate amendments to the company statute.
Changes in tax legislation
The Act of Ukraine On Introducing Amendments to the Tax Code of Ukraine and Certain Legislative Acts of Ukraine regarding Ensuring Balance of Budget Revenues in 2016, of 24 December 2015, No.909-VIII, suggests the following changes in tax legislation:
— A flat rate of personal income tax is established at the level of 18% (previous rates were 15% and 20%). The tax assessment base is not changed. Passive income is taxed at the rate of 18%, but dividends from income tax payers are taxed at the rate of 5% as before. The amounts of funds provided to a taxpayer by an international financial organization in connection with taking energy efficiency and energy saving measures, are exempted from taxation. The amounts released by creditors on foreign currency loans obtained to purchase the only housing, are exempted from taxation.
— The rate of the Unified Social Tax (UST) accrued by an employer is reduced. Such rate is set at 22% (previous rates ranged from 34.7% to 49.7%). The UST deduction on account of an employee is completely cancelled (the rate was 3.6%). The maximum UST base amount is increased to 25 minimum wages (previously — 17 minimum wages) Simplified taxation system: ² and ²² groups remain unchanged. For taxpayers of the III group the annual income was reduced from UAH 20 million to UAH 5 million. Also, for taxpayers of the III group the tax rate is increased from 2% to 3% (for VAT payers) and from 4% to 5% (for non-payers of VAT). The unified tax rates for taxpayers of the IV group (farm businesses) are increased by 1.8 times.
— The base income tax rate remains at 18%. The payment of advance installments is cancelled. Advance installments at dividend payment remain. In addition, a quarterly reporting period is introduced for all payers. For the newly created during a fiscal year taxpayers; manufacturers of agricultural products; taxpayers, the annual income from any activity (after deduction of indirect taxes) of which for the previous annual accounting (fiscal) period, did not exceed UAH 20 million, an annual reporting period is set. VAT remains at 20%, and in case of export − 0%. In case of importing and supplying registered medicinal products, medical devices and medical equipment, the rate of 7% remains unchanged.
— The supply of international technical and humanitarian assistance; transactions of banks and other financial institutions related to delivery of property acquired by them as a result of levying execution upon such property, is exempted from tax. In addition, the procedure for budget refund is changed.
— Until 1 January 2017, special tax treatment is maintained for agricultural product manufacturers. The distribution of VAT liabilities between the budget and the special account is linked to the type of activity carried out by an agricultural products manufacturer. Exporters of cereal and industrial crops are now entitled to a VAT refund from the budget.
All changes came into effect from 1 January 2016, except for changes regarding VAT refund from the budget, which shall come into effect from 1 February 2016, and changes regarding excise duty, which shall come into effect from 1 March 2016.
