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Expectations 2020: Top 20 Legal News for Business

The beginning of the year is a time of planning and analyіsis of the last year’s victories and defeats. Therefore, we suggest you to review the changes that have already happened or will happen during 2020.

What awaits Ukrainian business in the new decade you can read in article of ESQUIRES’ Lawyer Victor Zalotin in Mind.

We offer a selection of the 20 most important legal news for 2020 that will benefit businesses, regardless of their area of activity.

1.Increased taxes and fees

Traditionally, indicators that affect taxation increase in the new year.

Starting from January 1, 2020 the minimum salary will be 4723 UAH, the minimum cost of living for able-bodied persons – 2102 UAH. Сonsequently the amount of the minimum insurance payment from the Unified Social Tax (UST) in 2020 will be 1039.06 UAH.

The single tax for entrepreneurs of the 1st group will be 210.2 UAH, together with the UST – 1249.29 UAH per month. The single tax for individual entrepreneurs in the 2nd group will be 944.6 UAH, together with UST – 1983.66 UAH per month.

2. New bank accounts

Starting from January 13, 2020, only bank accounts of the international standard IBAN are used in Ukraine.
Bank account numbers contain 29 characters to meet the requirements of the IBAN standard, which is used in Europe. Under such conditions, the old accounts will no longer be valid, therefore, we advise you to check any details in order to avoid annoying errors.

3. In 2020, the business expects a series of inspections

Here is the scope of inspections, namely the number of business entities that will be checked during the year:

• The State Labor Service of Ukraine – 16905
• Pension Fund of Ukraine – 1150
• The State Service of Ukraine for Food Safety and Consumer Protection – 22432
• State Environmental Inspectorate – 11328
• State Emergency Service of Ukraine – 44119
• State Tax Service of Ukraine – 6147

4. Payment transaction registrars (PTRs)

Innovations in the field of PTR application will come inforce in stages over the course of a year.

Starting from April 19, 2020, you will be able to use PTRs instead of regular cash registers and issue electronin checks fo buyers. The amount of fines for violations of PTR legislation will increase significantly.

From October 1, 2020, there will be an expansion of entrepreneurs who will be required to apply PTRs regardless of income. In addition to equipment and medicines, it will include:
• internet commerce;
• jewelry trade;
• catering;
• tourist services;
• hotel services.

From the same date, the rules on “cashback” will work: buyers who have made a purchase сosting more than 850 UAH and have not received a fiscal check, that meet all the requirements of the PTR legislation, will be able to get their money back.

5. Incoterms 2020

On January 1, 2020, the new Rules Incoterms 2020 (Interpretation of International Trade Terms), which were published on September 10, 2019, came into force. The following changes occurred in the new basic conditions for product delivery:

• removed the term EXW (self-removal) from Incoterms rules;
• deleted the term FAS (freely along the ship’s side);
• devided the term FCA (Franco Carrier) into two delivery bases: one for ground shipping and the other for marine container shipments;
• changed the terms of delivery of FOB and CIF for container transportation;
• a new term in Incoterms 2020 – CNI (Cost and Insurance), which means that the seller has made a delivery when the insured product is located at the specified shipment port;
• two new rules of Incoterms 2020 are based on DDP delivery conditions – DTP and DPP.

6. New rules for registration of geographical indications introduced

On January 1, a law to improve the legal protection of geographical indications comes into force. Legal protection is granted to a geographical indication, which is fully or partially homonymous with the geographical indication registered in Ukraine, under condition of fair local and traditional use and if such use excludes the possibility of confusion and misleading consumers regarding the actual origin of the goods.

Now mozzarella and cognac will partially disappear from the shelves, but Hutsul cheese and varieties of Ukrainian wine will appear.

7. Parliament abolished the state monopoly on alcohol production

On January 1, 2020, the Verkhovna Rada provided business entities with the opportunity to produce alcohol of any form on condition they has got of an appropriate license, and also parliament introduced full liberalization of alcohol exports from Ukraine.

At the same time, to protect the domestic commodity producer, until January 1, 2022 the import of alcohol can only be implemented by the state enterprises authorized by the Cabinet of Ministers.

8. Lawyer monopoly is canceled

Despite long expectations, from January 1, the lawyer monopoly has not been introduced. It should be indicated that it is partial, because at least in criminal cases only a lawyer can represent a suspected / accused.

9. In-house lawyers were allowed to represent the company in court

Speaking about the cancellation of the advocate monopoly, we cannot but omit other legal consequences – state bodies and legal entities can again represent themselves in the courts. This can be not only the leaders, members of the executive bodies of a legal entity, but also other authorized persons in accordance with the law, the charter, the regulation, the labor agreement (contract) (including employees).

10. Prospects for the legalization of marijuana

In middle of October of the privious year, the Servant of the People party announced plans to legalize medical cannabis in Ukraine. Two months later, the corresponding bill on legalization was not adopted, and was not even registered in parliament. The main battle between all interested parties is appointed on 2020.

Considering the global liberalization trends (only in 2019 marijuana was legalized in Canada, medical marijuana in the states of Louisiana and Illinois (USA), and in general it is partially or fully legalized in 46 countries of the world), new business opportunities in the field of сannabis cultivation can be expected.

11. Prospects for opening the agricultural land market

The most popular legislative initiatives of the Verkhovna Rada of 2019 certainly relate to the circulation of agricultural land. The main question under discussion is: who will be able to acquire ownership of land?

According to the latest draft law, citizens of Ukraine can acquire ownership of land for agricultural purposes; legal entities of Ukraine, established and registered under the legislation of Ukraine, whose members are only citizens of Ukraine and / or the state and / or territorial communities; territorial communities; state. Foreigners are not allowed to acquire ownership of land plots – the prohibition will be invalid if the land is approved for sale to foreigners in a referendum.

Another issue that causes conflicts in the discussions of the draft law: how to register the acquisition of land ownership in case of dual citizenship? Nevertheless, the law will inevitably be written this year.

12. Prospects for the legalization of gambling

In the middle of December 2019, people’s deputies did not support the legalization of the gambling business, and the law was sent for revision.

On January 16, 2020, the law was approved in the first reading – it is proposed to license and regulate the activities of casinos, bookmakers, slot machines, lotteries, and online gambling.

Accordingly, a number of registers are being developed, one of them is a register of self-restrain persons who will not be allowed to gamble. This means that players will go through preliminary identification, and therefore illegal gambling establishments will partially exist.

13. Changes in the rules of financial monitoring

Starting from 2020, the amount of financial transactions subject to mandatory financial monitoring will be increased from 150,000 to 400,000 UAH (except in situations where the payer or transaction is identified as risky by other criteria). In the same time with the appreciation of the hryvnia in the foreign exchange market, such reform will make life easier for both regulatory authorities and businesses.

14. Changes in the financial services market

From July 1, 2020, the National Financial Services Commission (the National Commission implementing state regulation in the field of financial services markets) will be completely liquidated – the functions of this institution will be devided between the National Bank and the National Commission for Securities and Stock Market.

Parliament passed the relevant law in September. Thus, the NBU will become responsible for the activities of insurance, leasing, financial companies, credit unions, pawnshops and credit reference bureaus.

15. The procedure of state purhases will be chancged

In April 2020, a new law is coming into force, according to which the procurement threshold will be reduced to UAH 50,000, and bidding from UAH 50,000 to 200,000 will be held according to a shortened procedure. Procurement participants will be given a day to correct inaccuracies in the tender proposal. Today you cannot correct the proposal, which leads to the rejection of the application.

16. Simplification of property valuation

No later than July 1, 2020, a simplified procedure for the assessment of real estate objects will be introduced: any person will be able to receive a certificate of assessment in a short timeframe and dispose of property on its basis. If person disagrees with a defined value, it will be possible to conduct an assessment in a general manner with registration of assessment reports in the Unified Database.

The law also provides notaries with the right to receive a free access to the Unified Base for checking certificates and real estate appraisal reports.

17. Rada supported the deoffshorization of the Ukrainian economy

On December 4, 2019, the Verkhovna Rada adopted in the first reading draft bill No. 1209-1 and No. 1210 on the privention of the tax base dilution and the removal of profits from taxation (BEPS) and for deoffshorization of the economy.

So, bill No. 1209-1 is aimed to introduce international standards of tax control for all participants of international trade, as well as to reform the institution of financial responsibility and to improve the administration of taxes and fees.

Bill No. 1210 aims at liberalizing of foreign exchange regulation – the law introduces taxation of profits of controlled foreign companies in the level of the controller and a list of other measures to prevent tax evasion. The majority of changes is introduced from January 1, 2020

18.The Public Service of Labor will control business in a new way

By a resolution as of December 4, 2019 No. 1132, The Cabinet of Ministers stated the inspection procedure of the Public Service of Labor in a new edition, that came into force from December 31, 2019. Now, inspections will be carried out in the form of inspection visits conducted by labor inspectors of Public Service of Labor and its territorial bodies (previously, inspections were also carried out in the form of documentary audit).

However, everything can change with the adoption of the draft law “On Labor”, which was registered on December 28 and which will replace the Code of Labor Laws. According to the bill, both on-site and off-site inspections are provided, and employers are not fined if they eliminate all violations within the prescribed time.

19. A program to support small and medium enterprises will start its work.

From February 1, 2020, a program will start to operate to support small and medium enterprises, which provides with affordable crediting at 5-9% per annum. Loans up to UAH 1,500,000 for a period of 5 years at 5% per annum will be granted if income of UAH 25 million is expected and at least two jobs are created.

Loans at 7% per annum will be granted if income of UAH 25 million is expected, without creating new jobs, but for each new employee the rate will be decreased on 0.5%. The loans at 9% per annum will be granted for a business with an income of 50 million UAH.

However, the range of business activities is not limited. It can be both education, sports or healthcare, and energy, the production of any goods or the provision of any services

20. Novels in declaring

From January 1, 2020 among the subjects for declaration are :
• legal entities, trusts or other similar legal entities, which ultimate beneficial owner (controller) is the subject of the declaration;
• cryptocurrency owned by the subject of the declaration or members of his family declared as part of intangible assets;
• banking and other financial institutions, where the subject of the declaration or members of his family have accounts, other property.