Tax and Legal news (20.08.24)

Below, you will learn about:

• Government has expanded the list of activities for entry into Diia City;
• Amendments to the Tax Code of Ukraine regarding the "white business club" have come into force;
• New financial monitoring rules for certain entities came into force on August 1;
• Martial law in Ukraine has been extended for 90 days;
• National Bank of Ukraine has implemented changes to currency legislation;
• National Bank of Ukraine has left its key policy rate unchanged at 13%.
        

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Government has expanded the list of activities for entry into Diia City

On August 9, 2024, the Government, through Resolution No. 910, expanded the list of activities eligible for the Diia City legal regime. This regime was established by the Government Resolution dated April 19, 2022, No. 467 "On Determining the Types of Activities Stimulated by the Creation of the Diia City Legal Regime".

Key aspects:

Companies involved in the production of bionic prosthetics can now become Diia City residents. This includes organizations engaged in:

• development;
• implementation;
• providing maintenance and repair services for these products.

^{Source: Government Resolution dated August 9, 2024, No. 910 "On Amending the List of Activities Stimulated by the Creation of the Diia City Legal Regime".} 

Amendments to the Tax Code of Ukraine regarding the "white business club" have come into force

As of August 1, 2024, the Law of Ukraine "On Amendments to the Tax Code of Ukraine Regarding the Features of Tax Administration During Martial Law for Taxpayers with a High Level of Voluntary Compliance with Tax Legislation" dated June 18, 2024, No. 3813-IX (hereinafter – the Law) has come into force.

The Law stipulates that taxpayers who meet certain requirements and criteria established by the Law (including requirements regarding tax payment levels, payroll levels, and the absence of a decision on the taxpayer's risk status for VAT purposes, among others) will be included in the List of Taxpayers with a High Level of Voluntary Compliance with Tax Legislation (hereinafter – the List).

Key aspects:

• The Law provides that a taxpayer included in the List will benefit from the following tax administration advantages:
  • a moratorium on documentary audits will apply, with some exceptions;
  • shortened deadlines for providing individual tax consultations (within 15 calendar days following the date of receipt by the central executive authority responsible for state tax policy, without the possibility of extending the review period);
  • a compliance manager will be assigned to the taxpayer, with whom the taxpayer can interact, including through remote communication methods, such as video conferencing;
  • the possibility to receive information on tax risks from the tax authority within five days upon request.
• In the final provisions of the Law the Government recommends to establish a procedure for taxpayers on the List to automatically reserve up to 25% of their conscripted employees.
• The State Tax Service has 3 months from the date of the Law’s publication (starting July 25, 2024) to approve and form the first List.

^{Source: Law of Ukraine "On Amendments to the Tax Code of Ukraine Regarding the Features of Tax Administration During Martial Law for Taxpayers with a High Level of Voluntary Compliance with Tax Legislation" dated June 18, 2024, No. 3813-IX.}

New financial monitoring rules for certain entities came into force on August 1

As of August 1, 2024, the Regulation on Financial Monitoring by Primary Financial Monitoring Entities, approved by the Ministry of Finance Order No. 282 dated June 7, 2024 (hereinafter – the Regulation), has come into force. 

Key aspects:

• The requirements set forth in the Regulation apply to the following primary financial monitoring entities:
  • auditing entities;
  • accountants and businesses providing accounting services;
  • businesses offering tax consulting services;
  • businesses involved in real estate brokerage and/or consulting services;
  • businesses trading in cash for precious metals, gemstones, and products made from them;
  • businesses dealing in cultural valuables and/or providing intermediary services in this field;
  • entities conducting lotteries and/or gambling activities.
• The Regulation establishes general requirements, including:
  • programs for conducting primary financial monitoring and other internal documents related to financial monitoring, as well as unified rules for preventing and combating money laundering;
  • conducting training sessions and preparing staff for identifying financial transactions subject to monitoring;
  • performing due diligence checks on clients (and their representatives), including verifying sources and ensuring reliability;
  • simplified and enhanced due diligence measures;
  • conducting internal audits to ensure compliance with anti-money laundering legislation;
  • procedures for submitting information and/or documents (reports, decisions), copies of documents, or extracts upon request by the Ministry of Finance.

^{Source: Ministry of Finance Order of Ukraine "On Approval of the Regulation on Financial Monitoring by Primary Financial Monitoring Entities, State Regulation, and Supervision of Their Activities by the Ministry of Finance of Ukraine" dated June 7, 2024, No. 282.} 

Martial law in Ukraine has been extended for 90 days

On August 8, 2024, the Law of Ukraine "On Approval of the Presidential Decree "On the Extension of Martial Law in Ukraine" dated July 23, 2024, No. 3891-IX (hereinafter – the Law) came into effect. This Law approves the Presidential Decree "On the Extension of Martial Law in Ukraine" dated July 23, 2024, No. 469/2024, which extends martial law from 5:30 AM on August 12, 2024, for a period of 90 days.

^{Source: Law of Ukraine "On Approval of the Presidential Decree "On the Extension of Martial Law in Ukraine" dated July 23, 2024, No. 3891-IX.}

National Bank of Ukraine has implemented changes to currency legislation

The National Bank of Ukraine introduced a series of changes to currency legislation, effective from July 11, 2024.

Key aspects:

• Businesses can now reimburse non-residents for expenses incurred through their participation in providing external loans to Ukrainian borrowers, provided that the guarantor, co-signer, or insurer of the external loan is a foreign export-credit agency, a foreign state, or an international financial organization (IFO).
• A new provision allows funds to be transferred to foreign companies, whose shareholders include a foreign state, for paying insurance premiums under contracts covering war risks in Ukraine.
• Residents are now permitted to transfer funds for guarantees or sureties they have provided to secure the obligations of resident borrowers under external loans and credits, provided such payments are allowed by the National Bank of Ukraine’s Resolution No. 18 dated February 24, 2022.
• The limit of UAH 100,000 per day for the purchase and sale of foreign currency in cash for non-cash hryvnias has been clarified. This limit aligns with the cash withdrawal limit from client accounts and applies only to non-cash funds.

^{Source: National Bank of Ukraine Resolution "On Amendments to the Resolution of the National Bank of Ukraine No. 18 dated February 24, 2022" dated July 9, 2024, No. 83.}

National Bank of Ukraine has left its key policy rate unchanged at 13%

The decision to keep the key policy rate, at 13% per annum, had been approved by NBU Board Decision On the Key Policy Rate No. 272, dated 25 July 2024, which came into effect on 26 July 2024.

The NBU stated that the decision aims to ensure the stability of the foreign exchange market and bring inflation closer to the 5% target over the forecast horizon.

^{Source: Board Decision "On the Discount Rate" No. 272-рш dated July 25, 2024.}