Law Digest

Amendments to the Land Code of Ukraine

On 16 March Draft Act No.2279 On Amendments to the Land Code of Ukraine regarding Bidding for Land was signed by President Petro Poroshenko. The general aim of the Draft is to reduce corruption when disposing of state and communal land as well as to improve the land bidding procedure. From now on, the land auctions have to be held according to the On Government Procurement Act of Ukraine. The list of cases when land can be sold without bidding has been shortened, and currently land bidding is to be held when selling land to state/communal enterprises, state-financed institutions, higher education establishments as well as to business entities with statutory capital having state/communal share of over 60%; when providing individuals with land for farming, owner-operated farming, gardening, building and maintenance of a dwelling-house and household facilities (household plot), individual dacha construction, individual garage construction.  

Amendments to adopted Tax Code

On 12 April the Verkhovna Rada of Ukraine adopted the On Amendments to the Tax Code Regarding Stimulation of the Second-Hand Goods Market Development Act (Draft Act No. 3046-д), which introduces amendments to the Tax Code as regards determining the VAT basis for transactions in second-hand goods. The adoption of this Act is necessary for providing transparency to the performance of the consumer goods market, eliminating disputable and ambivalent interpretations of tax legislation regarding definitions of terms and commercial transactions at the consumer goods market, as well as shady and non-transparent schemes of buying/selling of secondhand goods. In particular, the marginal principle for determining the VAT basis for transactions in the supply of second hand goods is now applied to the supply of goods purchased from any non-payers of the above-mentioned tax, and the uniformity of second-hand goods as a condition for determining the tax basis for their sale is excluded.    

Business registration transferred to local authorities

The Cabinet of Ministers of Ukraine has transferred registration functions for the rights to immovable property from the Ministry of Justice to local government authorities. Documents provide for the transfer to local government authorities, local administrations, notaries and accredited subjects powers for delivery of administrative services in the field of state registration of legal entities and individual entrepreneurs. A reminder that on 11 December 2015 Ukrainian President Petro Poroshenko signed the On Decentralization of Powers as for State Registration of Legal Entities and Individual Entrepreneurs, as well as of Property Rights to Real Estate and its Encumbrances Act of Ukraine.

Promoting family farms activity

Parliament has adopted in the first reading Draft Act No.1599 On Amendments to Certain Acts of Ukraine of the Creation of Family Farms and Promoting their Activity in the second reading. This Draft significantly simplifies the process of creating farms for individuals and legal entities who want to conduct business activities.

A farm without legal entity status is organized on the basis of activity by self-employed individuals, and has the status of a family farm, providing for use only labor of such farm members that are solely a self-employed individual and his/her family. Only a family member can be the head of a family farm. Such businesses may involve other citizens solely for seasonal and individual works directly related to farming activities and requiring special knowledge or skills. It is also stipulated that farms that are called family farms are provided with additional state support provided under the On State Support of Ukrainian Agriculture Act.

Procedure on granting special permits for subsoil use

At its meeting of 6 April 2016 the Cabinet of Ministers approved the Draft Resolution of the Cabinet of Ministers of Ukraine On Amendments to Procedure Approved by Regulations of the Cabinet of Ministers of Ukraine No.594 of 30 May 2011 and No.615 of 30 May 2011, and Annulment of Certain Acts of the Cabinet of Ministers of Ukraine.

Prior to introduction of these changes to current legislation the State Service of Geology and Mineral Resources of Ukraine was given only 60 days to seek permits from regional councils and for the service to give a decision. These deadlines in many cases demanded that regional councils convene an extraordinary meeting, which was contrary to rules and procedures of councils.

The Cabinet of Ministers also ruled out the possibility of providing special permits without an auction for succiniferous rock materials extraction in areas that do not have commercial value and do not exceed one hectare.

In addition, the term for auction announcement by the State Service of Geology and Mineral Resources of Ukraine was increased from 30 to 90 days prior to its holding. Accordingly, the deadline for applications to take part in an auction was increased from 15 to 75 days.

Provisions of the draft are focused on implementing EU Council Directive No.94/22/EU On Terms of Provision and Use of Permits for Search, Exploration, and Production of Hydrocarbons.