L&M Finance Group

October changes in legislation under martial law

On September 27, a Draft law was signed to amend the procedure for submitting information on final beneficiaries.
This Draft Lawproposes the followings changes:
-       to the Law "On the State Registration of Legal Entities, Individuals - Entrepreneurs and Public Organizations", which will provide for the automation of checking information on persons who are the ultimate beneficial owners of a legal entity, as well as the cancellation of the requirement for exclusive notarization of copies of documents submitted for confirmation of the identity of the ultimate beneficial owner, reduction of cases of submission of relevant information by legal entities during registration actions;
-       to the Law "On prevention and counteraction of legalization (laundering) of proceeds obtained through crime, financing of terrorism and financing of the proliferation of weapons of mass destruction", which will specify the procedure for determining by legal entities information about the ultimate beneficial owners and the structure of ownership, will introduce the obligation of legal entities, who are the founders (participants) of legal entities and/or exercise decisive influence over their activities, to provide, at the request of legal entities, information necessary for submission by a legal entity for entry or updating in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations of information about ultimate beneficial owner and ownership structure of the legal entity.
This draft law was introduced to simplify the procedure for submitting information about the ultimate owners (beneficiaries), which will significantly improve and increase the effectiveness of the necessary financial monitoring and speed up the submission by legal entities of information about the ultimate beneficial owners and the ownership structure to the Unified State Register.

On October 1, "Customs Visa Free" became operational in Ukraine
The provisions of the Convention on the Common Transit Procedure, as the International Application of NCTS, which opened the possibility for businesses to move goods internationally with other participating countries under a single transit document, entered into force in October. This procedure will speed up customs clearance and reduce the burden on businesses.

The Verkhovna Rada voted to adopt as a basis in the first reading the draft law on amendments to the outdated law on collective agreements and contracts.
On October 6, a draft law was adopted, which provides that employees and employers will receive more modern and effective tools for conducting social dialogue, at the same time, the protection of the parties to collective agreements will be strengthened. According to the draft law, the expansion of the subject composition of the parties to collective negotiations will allow the involvement of newly created trade unions in the social dialogue. In particular, at the sectoral level: non-representative representatives who conclude sectoral agreements of limited effect will be able to participate in collective negotiations. The draft law also provides for the possibility of suspending and terminating the effect of certain provisions of collective agreements and contracts - with the consent of the parties and in the event of force majeure circumstances (the list of which is specified in the contract) and the joining of new entities to the parties to the agreements and contracts.

October 6 The President signed the law on taxation of "future real estate" transactions.
According to the explanatory note to the draft law, the law envisages facilitating public access to new housing, reducing the tax burden on the provision of new housing, creating transparent, balanced and reasonable conditions for investment related to real estate and its use, as well as cleaning the industry from possible tax fraud by changing the procedure for taxation of operations related to the creation and supply of residential real estate.
The law proposes the following changes to taxation:
1.     for income tax payers, the peculiarities of the taxation of transactions from the first sale under the purchase and sale contracts of an undivided residential object under construction or a future object of residential real estate are established;
2.     transactions for the first supply of housing (residential real estate objects), an indivisible residential object under construction or a future residential real estate object, the cash method of VAT tax accounting will be applied;
3.     the date of occurrence of tax obligations of the executor of long-term contracts, except for contracts for the construction of housing (residential real estate objects), contracts for the sale of an indivisible residential object under construction or future residential real estate object, in respect of which their first supply takes place, shall be considered the date the actual transfer by the executor of the results of work under such contracts;
4.     add to the list of operations for the first supply of housing also operations for the purchase and sale of an indivisible residential object under construction or a future object of residential real estate;
5.     income from the sale during the reporting (tax) year of an indivisible object of unfinished construction or a future real estate object, a divisible object of unfinished construction and from the assignment of rights under a contract of sale of an indivisible object of unfinished construction or a future real estate object, in respect of which a partial price has been paid and an encumbrance of property rights has been registered in favor of the buyer, may be reduced by documented costs for the acquisition of such an object, property rights.
6.     income from the sale during the reporting (tax) year of the first real estate object, provided that it has been owned for less than three years, and income from the sale during the reporting (tax) year of the third and subsequent real estate objects are subject to taxation at the rate of 18% personal income tax ;
The following remains unchanged:
1.     income from the sale during the reporting (tax) year of the first real estate object, provided it has been owned for three years or more — is not subject to personal income tax;
2.     income from the sale during the reporting (tax) year of the second real estate object, provided that it has been owned for three years or more — is subject to 5% personal income tax;
3.     when selling real estate objects received as a gift, expenses are only the amount of state duty, registration fee and similar payments, taxes and fees paid in connection with the registration of the gift;
4.     the requirement to own for three years does not apply to inherited objects.

On October 12, the President of Ukraine signed the Law on Employment of Foreigners and Stateless Persons in Ukraine.
The law stipulates that all conditions must be created for foreigners regarding the payment of work both for citizens of Ukraine and for foreigners and stateless persons staying in Ukraine on legal grounds. Improvement of the system of settlement of issues regarding the issuance, renewal, and extension of permits for employment of foreigners; simplifying access to administrative services to ensure the creation and strengthening of effective service for employers. Creation of the national labor market and its regulation in terms of attracting foreign labor.

On October 19, the Verkhovna Rada adopted the Draft law on renewing the functioning of the legislative framework for the adopted acts, which were adopted under martial law.
According to the explanatory note to the draft law, this draft law is entrusted with the restoration of the system of registration of lease rights for agricultural plots of land and the improvement of state regulation in the field of land protection and maintenance of the State Land Cadastre. Among other things, the bill proposes the following :
·      to resume conducting land auctions for the transfer into use of agricultural plots of state and communal property;
·      to restore the registration of lease rights to agricultural land plots in the State Register of Real Property Rights, which was stopped due to the war;
·      cancel the need to compensate agricultural losses in the event of a change in the purpose of agricultural land plots;
·      regulate the issue of entering the State Land Cadastre with information on the qualitative characteristics of land, measures for the protection of land and soil, restrictions on the use of land;
·      establish that citizens and legal entities who have received the right to permanent use of land plots of state and communal property, but in accordance with the Land Code of Ukraine cannot be the subjects of such a right, can buy such land plots with installments of payment or lease them with specified terms of such contracts;
·      to allow, under martial law, the free privatization of land plots on which privately owned buildings and structures are located, as well as land plots that were transferred to citizens for use before the Land Code of Ukraine enters into force; to enshrine at the legal level the right of JSC "Ukrzaliznytsia" to carry out construction on land plots that are in its permanent use, not only with its own funds, but also with borrowed funds;
·      to make changes to the laws of Ukraine "On topographical, geodetic and cartographic activities", "On regulation of urban planning activities" regarding the creation and functioning of the cartographic and geodetic fund of Ukraine.
On October 21, the President signed the decree on the establishment of voluntary military registration for women.
The law establishes that women of suitable health and age , who have received a specialty and/or a profession related to the relevant military accounting specialty determined by the Ministry of Defense of Ukraine, are taken on the military registration of conscripts on their behalf voluntarily. At the same time, the law stipulates that women who are fit in terms of health and age , who have obtained a medical or pharmaceutical specialty, are subject to being entered into the military register of conscripts.

On October 21, the law amending the Law of Ukraine "On Mandatory State Social Insurance" was adopted
The law proposes to reorganize the activities of the Social Insurance Fund of Ukraine and the management of the Fund's executive directorate by joining the Pension Fund of Ukraine in order to reduce administrative expenses and improve the performance of key functions related to the implementation of insurance payments. Bringing operational processes of the funds into line with the consolidated administration system is proposed to be carried out on the basis of the Pension Fund as the most developed network of territorial management bodies in the social insurance system. This Law will enter into force on January 1, 2023.

On October 26, the President of Ukraine signed a law on exemption from fire inspections at the expense of insurance
The law stipulates that in the event that economic entities with an average and/or insignificant degree of risk conclude an insurance contract for their liability to third parties who may be affected by the activities of these entities, then the conduct of scheduled man-made and fire safety inspections can be postponed for up to 6-10 years in the presence of a liability insurance policy. According to deputy Zheleznyak , the method of voluntarily delaying fire inspections consists of the following four points:
1.     you receive a fire safety audit (it does not entail the obligation to correct deficiencies);
2.     you get insurance with this audit;
3.     inform the State Emergency Service about the availability of insurance;
4.     during the period of validity of the insurance contract, you are exempted from scheduled fire inspections.
On October 26, the law on e-Residence was signed.
Electronic residency is a status that enables a foreigner or a stateless person who has reached the age of eighteen to receive qualified electronic trust services, electronic services, and open bank accounts in Ukraine.
The law proposes to create favorable conditions for foreigners to open their business in Ukraine online. For example, such an electronic residency model is already in demand in Estonia. In accordance with the law, a foreign entrepreneur will pay taxes on his business activities in Ukraine, which will positively affect the investment climate of the country.