Legal updates (17.11.2022)

Below, you will learn about:

• Minimum wage in Ukraine has been increased
• State registration process updates
• The procedure for submitting information on the ultimate beneficial owners is simplified
• Amendments to the Law of Ukraine on limited and additional liability companies
• Decisions of National Bank of Ukraine
• Joint stock companies and corporate investment funds are obliged to hold remote general meetings by December 31, 2022
• Amended law on employment of the foreigners
• Issues of residence permits in Ukraine
• Ukraine joined the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports

From October 01, 2022, the minimum wage in Ukraine is: 

• UAH 6 700,00 per month.
• UAH 40,46 per hour. 

Increasing the minimum wage in Ukraine led to the increase of the unified social contribution paid by employers, as well as fines for violations of labour legislation.

On September 26, 2022, amendments to the Law of Ukraine On State Registration of Legal Entities, Individuals - Entrepreneurs, and Public Organizations entered into force., Above-mentioned amendments establish that legal entities may register changes to the information about themselves in the Unified State Register, as well as decisions on dissolving legal entity or revoking such decisions automatically through the Diia Portal (without state registrars engagement).

On September 29, 2022, relevant laws of Ukraine were amended in order to improve the regulation of ultimate beneficial ownership and the ownership structure of legal entities. Most of the amendments shall enter into force on December 29, 2022.

Along with the possibility of informing on the ultimate beneficial owners in electronic form, it is also provided that:

• annual confirmation of information on the ultimate beneficial owners is cancelled. Instead of this, in case of changing information about ultimate beneficial owners, a legal entity is obliged to update relevant information with the State Register within 30 business days upon occurrence of such changes;
• information about persons who are ultimate beneficial owners, which was submitted in electronic form, should be verified automatically (partially) ;
• the requirement to certify copies of identity documents confirming of the ultimate beneficial owners exclusively by the notary is cancelled;
• certified copies of the ultimate beneficial owners’ documents can be used only within 90 days from the date of their certification;
• founders (participants) of legal entities as well as persons who exercise decisive influence over their activities are obliged to provide legal entities with information about their ultimate beneficial owners and ownership structure upon the request. The fine may be imposed for breaching such obligation;
• the fine for non-submission or untimely submission of information on the ultimate beneficial owners is increased up to 20 000 tax-free minimum income of citizens; the fine in the amount up to 20 000 tax-free minimum incomes of citizens may be imposed for knowingly given false information about ultimate beneficial owners to the State Register;
• the ultimate beneficial owners determining methodology will be adopted by respective state authority;
• information on the ultimate beneficial owners should be submitted to the State Register within new deadlines that are - 6 months upon adoption the form and content of ownership structure and ultimate beneficial owners determining methodology, but no earlier than 90 days after termination or cancellation of Martial Law in Ukraine;
• within six months after adoption of the form and content of the ownership structure and ultimate beneficial owners determining methodology a legal entity is obliged to re-submit information about its ultimate beneficial owners in case of incompleteness, inaccuracies or errors in the previously submitted information.

It is established that Minutes of General Shareholders Meeting, shall be signed by the chairman of such Meeting or shareholder (its representative) authorized by the General Shareholders Meeting to do so, unless otherwise is provided by the charter of the company. If for making the decision to change the director of the company votes of not more than 10 shareholders are sufficient then the relevant Minutes shall be signed by the shareholders (their representatives) who voted for such decision and whose votes are sufficient to make the decision, unless otherwise is provided by the charter of the company. Each shareholder of the company who has participated in the General Shareholders Meeting may sign the Minutes. 

These changes are aimed to improve the mechanism of anti-raiding in Ukraine.

Legal entities are allowed to transfer money abroad to maintain their own branches, representative offices and other separate divisions

From October 01, 2022, the National Bank of Ukraine allowed legal entities to transfer money to the bank accounts of their own branches, representative offices and other separate divisions abroad, provided that the following conditions are performed simultaneously:

• such transfers are made only for the maintenance of own branches, representative offices and other separate divisions;
• monthly transfer is not exceeding a quarter of the total amount that was transferred by the legal entity abroad in 2021 for the maintenance of its own branches, representative offices and other separate divisions;
• transfers shall be made in foreign currency at the own expense of the legal entity (not by purchased money or money in credit, loan);
• such transfers shall be made via only the same bank (at the legal entity`s discretion).

It is allowed to transfer money to non-residents under commission, agency assignment agreements

The National Bank of Ukraine allowed the transfer money to non-residents under commission, agency, or assignment agreements in result of the selling, services or works determined by the Resolution of the Cabinet of Ministers of Ukraine dated February 24, 2022, No. 153 On certain issues regarding ensuring the implementation of imports starting from February 24, 2022.

Liberalisation of currency supervision for importing humanitarian aid to Ukraine

From October 01, 2022, additional reasons for the completion of currency supervision under deadlines for import of humanitarian aid to Ukraine were established by the National Bank of Ukraine.

The National Bank of Ukraine has defined the list of documents that allow banks to complete currency supervision of such import operations. Among other, there are a declaration on the list of goods recognized as humanitarian aid, as well as documents confirming the transfer or receipt of humanitarian aid by its recipient.

Key Policy Rateis kept at 25% per annum

On October 20, 2022, the Board of the National Bank of Ukraine decided to leave the Key Policy Rate at 25% per annum.

The next meeting of the Board of the National Bank of Ukraine is scheduled on December 08, 2022.

Activities of Ukrainian exporters are eased

The National Bank of Ukraine created conditions for the Ukrainian exporters to be able to participate in tenders for the supply of goods to non-residents. Thus, starting on November 05, 2022, Ukrainian banks were given an opportunity to provide tender guarantees on such operations.

These changes are aimed to improve business conditions for Ukrainian manufacturers, as the tender guarantees are used to enter new markets and find new export opportunities.

Use of foreign currency by charitable funds is eased

From September 06, 2022, to pay in foreign currency, legal entities firstly shall use their own foreign currency, and then, if necessary, buy it on the currency market of Ukraine.

At the same time, the National Bank of Ukraine made an exception for charitable funds. Banks will not consider available foreign currency balances on accounts of charitable funds and will not require to sell and/or use the available currency when fulfilling requests to purchase foreign currency to pay for import contracts.

On September 19, 2022, the National Securities and the Stock Market Commission adopted Decision No. 1183, which, in particular, determined that: 

• during the period of martial law in Ukraine, general meetings of joint stock companies or corporate investment funds may be held exclusively remotely;
• joint-stock companies or corporate investment funds located on the Ukrainian government-controlled territory should hold annual general meetings by December 31, 2022 (including this date);
• joint-stock companies or corporate investment funds located on the territory temporarily occupied by the Russian federation shall hold annual general meetings within 90 days after the termination or cancellation of martial law.

The Parliament of Ukraine adopted the following amendments to the Law of Ukraine On Employment of the Population regarding the employment of foreigners: 

• the Security Service of Ukraine approval of obtaining / extending work permit by citizens of the Russian federation and the Republic of Belarus is obligatory;
• electronic submission of the documents for obtaining / extending work permits is provided (via the official websites of the employment centres or via State Web Portal of Electronic Services);
• the obligatory minimum wage for foreigners is cancelled;
• the maximum validity period of work permit is increased;
• the state fee for issuing/extending for work permit is increased.

In addition, it is provided that work permits for foreigners who are students in Ukraine are free of charge for their employers.

State fee for issuing (including in case of loss or theft) and exchanging permanent or temporary residence permits is increased.

On October 21, 2022, the Resolution of the Cabinet of Ministers of Ukraine No. 1202 On Certain Issues of Implementation of Legislative Acts in the Field of Migration under Martial Law was adopted. Under this Resolution permanent or temporary residence permits, which are expired or are subject to exchange after February 24, 2022, shall deemed valid until the end of Martial Law in Ukraine and, in turn, allow foreigners to enter and legally stay in Ukraine during Martial Law and 30 days after its termination or cancellation. Above-mentioned Resolution does not apply to residence permits of Russian citizens.  

On November 03, 2022, the State Tax Service of Ukraine joined the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (hereinafter referred to as the CbC Multilateral Agreement). The introduction and exchange of reports across countries are provided for by the provisions of BEPS Action 13, which is a component of the Minimum Standard of the BEPS Action Plan, which Ukraine has undertaken to implement.

It was previously noted that the CbC Reporting applies for the first time for the fiscal year 2021, but not earlier than the year in which the competent authorities joined the CbC Multilateral Agreement. As of now, the official clarifications on the first reporting year (2021 or 2022) are awaiting, as this matter is not clear enough from the prescriptions of the Tax Code of Ukraine.

According to the information on the website of the Cabinet of Ministers of Ukraine, the Ministry of Finance of Ukraine and the State Tax Service of Ukraine are currently taking successive measures to ensure the technical capacity to exchange such reports.

After cross-country reporting of an international group of companies is implemented in Ukraine, Ukrainian taxpayers that are part of international groups of companies whose aggregate consolidated income for the year preceding the reporting year exceeds EUR 750 million will be required to submit CbC reports in Ukraine in the following cases (clause 39.4.10 clause 39.4 of Article 39 of the Tax Code of Ukraine):

• if the taxpayer is the parent company of an international group of companies; or
• if the parent company of an international group of companies authorizes a taxpayer who is a resident of Ukraine to submit a country-by-country report to the supervisory body; or
• if in the country where the parent company of the international group of companies is located, the submission of the report is not required, and at the same time the parent company of such a group does not authorize another member of the international group to submit the report in another foreign jurisdiction where its submission is provided for; or
• if the parent company or another member of the group, authorized by the parent company to submit the report, is located in a “non-cooperative” country, that is, a country with which an international agreement has been signed, which provides for the possibility of exchanging tax information, but the procedure for exchanging reports across countries has not entered into force or existing facts of a systematic failure to comply with such an order (a complete list of such countries should be approved and made public by the central executive body implementing state tax policy no later than 60 calendar days before the deadline for submitting a report on controlled transactions for the relevant reporting year). 

We remind you that failure to submit a report by the taxpayer for the countries of the international group of companies entails the imposition of a fine equivalent to 1 000 of the subsistence minimums for an able-bodied person, established by law on January 01 of the tax (reporting) year (subsistence minimum for an able-bodied person as of January 01, 2022, is UAH 2 481,00).