L&M Finance Group

Changes in legislation in October for the period of martial law

On September 5, the Cabinet of Ministers of Ukraine adopted Resolution No. 9 5 3 on the introduction of new rules for the passage of humanitarian aid.

In accordance with this resolution, recipients of humanitarian aid will need to register in the Unified Register of Humanitarian Aid Recipients (hereinafter referred to as the Unified Register).

Registration must take place in the electronic office of the automated system (https://human-aid.ioc.gov.ua/). The status of the recipient is acquired from the moment of registration in the Unified Register with the assignment of the number of the recipient of humanitarian aid to the recipient in the manner specified by Regulation No. 927.

The recipient will also need to enter information on the list of goods that are recognized as humanitarian aid into the system. Such a list of goods is automatically assigned a unique code. Entering this information will certify the fact of recognition of the goods humanitarian aid. The rules apply to both clothing, food and hygiene products, as well as military and dual purpose goods imported as humanitarian aid.

As for the declarative principle, it remained. Yes, according to the form in accordance with Appendix 1 to the Procedure for submission, it is possible in electronic form through the single state information web portal "One-stop shop for international trade" or through the automated system of registration of humanitarian aid, the processes of which are defined by Regulation No. 927, or in paper form directly at the checkpoint across the state border of Ukraine.

IMPORTANT! It is forbidden to submit declarations without a unique humanitarian aid code. The list of goods declared in the declaration must correspond to the list of goods, the information about which is entered into the automated system under the corresponding unique code of humanitarian aid by categories and names of goods, number of seats, number of pieces and weight / volume. In the case of a discrepancy between the data declared in the declaration and the data of the automated system, the customs official refuses to allow the cargo of humanitarian aid to enter the territory of Ukraine (clause 6 of the Commented Procedure).

Among other innovations, the Inventory description procedure was added . The recipient, which is an enterprise, institution or organization that is supported at the expense of budgets, authorized by them by a state institution, authorized by the Ministry of Health to receive medical products, means, equipment, protection and others, necessary for the proper provision of health care in conditions of martial law, within 15 calendar days from the date of entering information about formalized humanitarian aid into the information and communication systems of customs authorities, which is automatically transmitted to the automated system, which records humanitarian aid assistance, which is actually received by forming an inventory description in the electronic office of the automated system. For the recipient of medical humanitarian aid, who is authorized by the Ministry of Health, a longer period has been defined for the formation and submission of an inventory description using the MedData system through automatic data exchange through the application program interface (API) - 60 calendar days from the date of entering information on the customs clearance of humanitarian aid according to the declaration. But this rule will come into force not on December 1, 2023, but three months later.

For all other recipients, the obligation to submit an inventory description arises if inconsistencies in the actually received humanitarian aid with the categories of goods and/or the name of the goods, and/or the number of places, and/or the number of pieces, and/or the weight/volume, which specified in the declaration, no later than the submission of the report. By submitting an inventory description of the humanitarian aid actually received, recipients of humanitarian aid inform law enforcement agencies of the established fact of non-compliance of the humanitarian aid actually received with the categories of goods and information specified in the declaration.

The report on the receipt of humanitarian aid must be completed and submitted , in the electronic cabinet or downloaded signed by the head of a copy of the paper report, or a copy of the report in electronic form with the superimposition of the KEP of the head, by the 15th of the month following the month in which the date of entering information on the customs clearance of humanitarian aid according to the declaration is indicated.

Declared humanitarian aid, for which no report has been submitted within 90 calendar days from the date of entry of information on the customs clearance of humanitarian aid according to the declaration, is considered to be the one for which there is no record of receipt and intended use, and which has not been used for its intended purpose. In this case, the recipient, with the exception of budgetary institutions, loses the status of recipient of humanitarian aid. His entry in the Unified Register is blocked.

The declaration, report, inventory description and copies of primary documents generated in the automated system or uploaded to it are placed in free and free access (clause 17 of the commented Procedure).

This law will enter into force on December 1, 2023.

Thus, the issue of accounting, reporting and control over the import of humanitarian aid underwent significant changes and clarifications. This is mostly done in order to ensure the use and distribution of humanitarian aid exactly for its intended purpose and to prevent its misuse.

Such an innovation will greatly complicate and slow down the process of importing humanitarian aid.

In particular, recently on October 16, a petition was submitted with a proposal to postpone the entry into force of this resolution for a period of 6 months and to revise its terms.

The subject of the petition indicated a number of problems that may be caused by this resolution at the moment, including:

· will complicate the work of small charitable foundations and public organizations, which will not be able to administer the processes of compliance with the new rules for the registration of humanitarian cargo;

· will stop the activities of individual missions of foreign volunteers who bring rubber aid and independently deliver it to dangerous regions for handing over to the military and civilians;

· will create a monopoly of large funds, which, despite their importance, still cannot cover all the needs that are not covered by the state as of this moment.

On September 19, the Government approved Resolution No. 1011 "Approving the Methodology for Determination of the Ultimate Beneficial Owner by a Legal Entity." The development of the Methodology is one of the key steps towards the creation of a comprehensive system of verification of information on the final beneficial owner (BBO).

The methodology for determining the CBV is necessary to establish a unified approach to determining the real owners of companies at the country level. This need arose due to the requirements of the Association Agreement between Ukraine and the EU and the implementation of FATF International Financial Monitoring Standards into Ukrainian legislation.

The methodology was created to determine the Ultimate Beneficial Owner and establish as a single approach to determine the real owners of companies. It provides mechanisms for researching information about natural persons who exercise control and decisive influence on the activity of a legal entity.

The methodology establishes the methods, methods and ways of finding out information about the presence of signs of a decisive influence on the activity of a legal entity. It also provides for the principles of the process of identification of a legal entity by a legal entity, monitoring and actualization (updating) of information about a legal entity.

Norms of the Methodology provide for the specifics of the definition of KBV for: non-profit organizations; institutions of joint investment - corporate; share investment and non-state pension fund; a partnership created in accordance with the legislation of a foreign jurisdiction on the basis of or in accordance with an agreement to conduct activities for the purpose of obtaining profit or achieving another common goal ; general and limited partnerships.

Verification of information about the CBV will ensure the availability of adequate, accurate and up-to-date information about the beneficial ownership of legal entities, to which the competent authorities will always have full and timely access. The methodology is an important step towards fighting corruption and ensuring transparency in the business sphere.

This document entered into force on October 3.

By order of September 27 No. 3445/5 of the Ministry of Justice and together with the order of the Ministry of Finance of Ukraine dated September 28, 2023 No. 3463/5/523 postponed the entry into force of order No. 2542/5 until December 1, 2023. This means that the changes regarding the notification to the Ministry of Justice about discrepancies between the information received by the subject of primary financial monitoring and the information placed in the Unified State Register will enter into force from the beginning of December this year.

Also, from October 1, 2023, the obligation of subjects of primary financial monitoring to notify state registrars about the unreliability of information about the ultimate beneficial owners and/or the ownership structure of a legal entity will not be introduced. According to the order dated September 28, 2023 No. 3463/5/523, the effective date of this obligation has been postponed to December 1, 2023.

Thus, the Ministry of Justice will not impose fines for inaccurate information on beneficial owners from October 1, 2023, as there will be no relevant grounds for this.

Please note that these changes relate to the terminology and the date of entry into force of the orders of the Ministry of Justice, namely the obligation to report discrepancies between the information received by the subject of primary financial monitoring and the information placed in the Unified State Register, and the obligation to report inaccurate information about the ultimate beneficial owners and/or ownership structure of the legal entity. Other information regarding the powers and duties of the subjects of primary financial monitoring remains unchanged.

On October 2, the Law "On Amendments to the Law of Ukraine "On Advertising" and other laws of Ukraine regarding the implementation of European legislation into the national legislation of Ukraine by implementing certain provisions of the European Union legislation in the field of audiovisual advertising (the European Convention on Transfrontier Television, Directive 2010/13/EU of the European Parliament and of the Council on audiovisual media services of March 10, 2010, as amended by Directive (EU) 2018/1808 of November 14, 2018), which was adopted by the Verkhovna Rada at the end of May this year.

The law provides for changes in the definition of the concept of "advertising", the scope of the Law dated 03.07.1996 No. 270/96-BP "On advertising", joint regulation and self-regulation in the field of advertising, requirements for the language of advertising, sponsorship, product placement, telemarketing, social advertising, general and special requirements for advertising, control mechanisms for its content and the order of distribution.

One of the important changes is the definition of "advertisement" as information about a person, idea and/or product, distributed for monetary or other remuneration or for the purpose of self-promotion in any form and by any means and intended to form or support in direct (direct advertising, telemarketing) or indirect (sponsorship, product placement) method of awareness of advertising consumers and their interest in such a person, idea and/or product. The term "product placement" was also introduced as a form of advertising distribution, which is the inclusion, for monetary or other consideration, of the product, service, trademark, or other intellectual property right under which the activity is conducted, or recommendations thereof, in any non-advertising audiovisual media program, including movies, or user content .

The law also provides for the establishment of advertising requirements on video-sharing platforms and information-sharing platforms, as well as electronic communications. It is prohibited to distribute advertising in the form of spam, including making mass calls using any communication technology without the prior written consent of the consumer, including in electronic form.

The law provides for additional restrictions and prohibitions regarding advertising of alcoholic beverages, trademarks, other objects of intellectual property rights under which alcoholic beverages are produced, and advertising of tobacco products. It is prohibited to advertise items related to their use, herbal products for smoking, electronic cigarettes, refill containers, liquids used in electronic cigarettes, devices for consuming tobacco products without burning them, tobacco-containing products for electric heating (TCPEH) according to with the help of a heater with electronic control, trademarks, other objects of intellectual property rights under which they are issued.

The mechanism of control over the order of distribution and content of advertisements has also been improved. All this is aimed at creating a fair and ethical advertising market in Ukraine and is a necessary prerequisite for Ukraine's accession to the European Union. The law envisages a new look at advertising as a tool for the formation of a conscious consumer who can independently make an informed decision about purchasing a product or service.

On October 17, the Verkhovna Rada of Ukraine praised draft law No. 929 6 -d on strengthening financial monitoring of PEP (Politically Exposed Person, politically significant persons).

Politically significant persons (PSP) in Ukraine are considered to be people who hold or have held important government positions (presidents, prime ministers, ministers and their deputies, deputies, high-ranking political figures, high-ranking officials of the judicial system, law enforcement agencies, justice, defense, leadership of the National bank, etc.), members of their families and related persons (for example, business and business partners).

Among the main innovation added that the term of PEP status was changed from three years to lifetime PEP status. Therefore, in the future, PEPs will be under financial monitoring for an almost unlimited time. This refers to the reason that a former PEP, although formally ceasing to perform the functions of a public figure, can continue to significantly influence the authorities and state leaders. This is an international requirement recorded in the latest MONEYVAL report on Ukraine's compliance with international financial monitoring standards.

At the same time, the draft law strengthens the responsibility of primary financial monitoring entities (PFM), such as banks, for unjustified refusal of users of financial services.

The wording of the draft law meets the international standards of combating money laundering and combating terrorism AML / CFT , which will be counted as the fulfillment of IMF requirements.

This law entered into force on October 26, 203.

On October 17, the Council of the European Union adopted the DAC8 Directive, which aims to revolutionize the exchange of crypto-assets and taxation in the digital world. This important decision deals with compliance and automatic exchange of information on income from transactions in cryptocurrencies, as well as tax solutions for high net worth individuals.

One of the most important aspects of the innovations is the introduction of mandatory automatic exchange of information between tax authorities and cryptoasset service providers. The introduction of such a system will avoid financial crime and ensure more effective taxation in the digital space. In addition, a Crypto-Asset Operator register will be created to register and control crypto-assets, including those issued in a decentralized way, stablecoins, electronic money and NFTs. The launch of the Crypto-Asset Operator register is planned for 2026.

The DAC8 updates also cover new verification procedures, reporting requirements, and other rules for crypto-asset reporting service providers, in line with the Crypto-Asset Reporting Framework and amendments to the Common Reporting Standard. The concepts of Reporting Crypto-Asset Service Provider, Reportable User, and Reportable Transaction are introduced. This will allow for a more accurate definition of tax obligations and reduce the possibility of financial violations.

The directive also expands the automatic exchange rules for advance tax rulings of wealthy individuals, includes a new automatic exchange of information on non-custodial dividends and similar income. The rules for reporting and transferring the tax identification number have been improved, as well as the provisions on responsibility for non-compliance with the legislation on reporting have been changed.

Expanding the scope of information exchange rules is aimed at combating tax evasion and fiscal manipulation.

The DAC Regulation also introduces penalties for non-compliance with national legislation on reporting requirements adopted pursuant to this Directive.

October 18, the joint Order of the Ministry of Finance and the Ministry of Defense of Ukraine No. 494/446 of 21.08.2023 (registered in the Ministry of Justice on 05.09.2023 under No. 1564/40620), which approved the Procedure for Electronic Information Interaction of the Unified State Register of Conscripts, Conscripts, entered into force and reservists (hereinafter - EDRPVR) and the State Register of Individuals - Taxpayers (hereinafter - the State Register).

This order provides that the Ministry of Defense, together with the TCC and the JV, will be able to send requests to the State Tax Service for obtaining confirmatory information about natural persons, in particular:

· the registration number of the taxpayer's registration card from the State Register or series (if available) and the passport number and full name of the taxpayer;

· the date of employment (if available) of the taxpayer;

· date of dismissal from work (if available) of the taxpayer .

Such cooperation will be a step towards the automatic exchange and verification of data of persons subject to military mobilization.

On October 24, President Volodymyr Zelenskyi signed the law on de-Sovietization in order to solve certain issues of the administrative-territorial system of Ukraine.

This Law determines the procedure for formation, liquidation, change of boundaries of administrative-territorial units and their names. This law also regulates the procedure for establishing and changing the categories of settlements and solving other issues of the administrative and territorial system of Ukraine, in particular it provides:

· defining settlements according to socio-economic and urban planning characteristics, which allows for a better understanding of the specifics of each settlement and the development of an effective policy for its development.

· establishment of the order of formation and liquidation of settlements, establishment and change of their boundaries, procedures for naming and renaming settlements, which is an important stage for ensuring the proper functioning of administrative-territorial units and ensuring their effective management.

· determination of the legal status of districts in cities, the procedure for establishing and changing their boundaries, naming and renaming districts in cities. This will make it possible to better organize the activities of municipal institutions and ensure proper functioning of administrative-territorial units.

· establishment of the order of formation, liquidation of districts and establishment (changes) of their borders, which will allow to better regulate the territorial organization of state administration and ensure the proper functioning of administrative-territorial units.

· consolidation of the role of public discussion when making individual decisions on issues of administrative and territorial organization. This will allow the public to be involved in the decision-making process and ensure a broader democratic process.

· establishing that cities of republican significance in the Autonomous Republic of Crimea, oblast and district significance, as well as urban-type settlements belong to the category of cities. This will make it possible to better organize state administration and ensure the proper functioning of administrative and territorial units.

It should be noted that there is no automatic status change, i.e. "downgrading" or "upgrading" of status for settlements. The law only provides a mechanism and a transparent procedure to do this at the will of the community.