LATEST NEWS

September 22, 2016

Vasil Kisil & Partners represented UNIQA Insurance Company

Vasil Kisil & Partners’ lawyers have represented UNIQA Insurance Company in a dispute over payment of an insurance indemnity in connection with a low crop yield caused by drought. Following the litigation that lasted over three and a h…

September 20, 2016

Sayenko Kharenko advised EBRD

Sayenko Kharenko acted as legal counsel to the European Bank for Reconstruction and Development on providing of up to the USD 20 million loan to the subsidiaries of Industrial Milk Company (IMC Group), Ukrainian agricultural holding listed …

September 16, 2016

IBA Annual Conference 2016 takes place in Washington, DC

The premier international legal forum held by the International Bar Association (IBA) gathers legal practitioners from all over the world in the US capital, Washington, DC. An amazing network with 6,000 delegates from 2,700 firms from over 130 ju…

 

CURRENT ISSUE (September 2016)

In focus – Compliance

Ukraine is often called a country with a difficult legal environment for business operations, presenting both opportunities and risks. Speaking generally, though business in emerging markets can provide lucrative opportunities, their business environments pose sanctions and fines for illegal commercial conduct. In the mindset of business leaders and in their market strategies harm to reputation may sometimes even exceed financial losses.

Selection of the most appropriate strategy to ensure compliance reveals that there is no one-size-fits-all solution. Compliance is named a risk-based process that sensitizes a broad understanding of a local context coupled with industry insights and global trends

With the support of Tax Regulation

According to the rules of the Tax Code of Ukraine, tax control in the sphere of transfer pricing is undertaken by monitoring and inspecting the calculation of completeness and of payment of income tax in controlled transactions.

Such information, obtained during monitoring of economic activities, is the basis for decision adoption as of inspections conduct. According to Yaroslav Romanchuk, managing partner of International Legal Center EUCON, individual taxpayers have already evaluated the effectiveness of monitoring measures, because those who carried out controlled transactions, but did not report them, have already received letters from the SFSU with a request to provide the appropriate explanations. Having analyzed information received from a taxpayer the inspection is usually carried out and in case of confirmation of the conduct of controlled transactions, the company shall have to pay a fine..

According to the rules of the Tax Code of Ukraine, tax control in the sphere of transfer pricing is undertaken by monitoring and inspecting the calculation of completeness and of payment of income tax in controlled transactions.

Such information, obtained during monitoring of economic activities, is the basis for decision adoption as of inspections conduct. According to Yaroslav Romanchuk, managing partner of International Legal Center EUCON, individual taxpayers have already evaluated the effectiveness of monitoring measures, because those who carried out controlled transactions, but did not report them, have already received letters from the SFSU with a request to provide the appropriate  explanations. Having analyzed information received from a taxpayer the inspection is usually carried out and in case of confirmation of the conduct of controlled transactions, the company shall have to pay a fine.

Expert Opinion

Internal Investigations: Why You Should Start Doing This Right Now

Olga B. Vorozhbyt, Oleksandr M. Frolov

It is universally recognized that an internal probe is an effective mechanism for attaining a great variety of goals, the most important of which are to terminate illegal practices, and to identify and bring to justice persons guilty of illegal activities. These inquests into the activities of a company and its officials are also frequently conducted with a view to ascertain facts such as, for example, whether a particular employee has: breached a non-compete clause, taken part in corrupt practices or stolen data/CRM databases, and also help to determine the level of losses resulting from corruption and other illegal activities

In Re

Competition Compliance and Competition Authorities

Pavlo B. Loginov, Serhiy M. Shershun

Compliance has been on top of the agenda recently in Ukraine. Everyone wants to be in compliance and everyone talks about it, but few have seen it. Competition compliance is no exception, and recent legislative changes bring certain optimism with respect to its future. In particular, in the light of changes to merger control regulations and published guidelines related to fines calculations companies (Ukrainian and international) have again became concerned about implementing competition compliance...

Non-Government Organizations and Charities in Light of Anti-Corruption Compliance

Alexander V. Bondar

The topic of Anti-Corruption compliance in Ukraine seems to have changed its status from being a popular topic for headlines and speeches of government officials into must-do activity for business entities.

The On Prevention of Corruption Act of Ukraine of 14 October 2014 (hereinafter the Act) has introduced a significant number of changes in this sphere, inter alia, for example, the necessity to establish the National Agency for Prevention of Corruption and establishing the obligation for some legal entities to have an Anti-Corruption Program (Policy) and an Authorized Person (Compliance Officer) on staff who would be responsible for the Anti-Corruption Program implementation, determining some new limits regarding gifts to government officials, etc.

News

Deals

Redcliffe Partners advised on extension of secured facility to Kernel

AVELLUM advised Allergan Inc

Asters advised International Finance Corporation

AEQUO — legal counsel to EBRD

Cases

Luc Besson ordered to pay for film plagiarism

Founder of Carlo Pazolini arrested in absentia in London

Court orders Sonders Trading K/S C Ltdto pay Ukrainian grain trader

Oschadbank filed lawsuit against Russia

Court overturns penalties applied to Ukrnafta

Law Digest

Act on ID-Passports was signed

NBU simplified currency exchange for the population

Ukraine and Malaysia signed anti-offshore agreement

Ratification of the Paris Agreement

Electronic document management for banks in cases of purchase and transfer of currency

Draft

Draft on tax reform

Compulsory health insurance proposed

Draft Act on Environmental Impact Assessment

International judicial cooperation

Chamber News

On 29 July the American Chamber of Commerce in Ukraine brought together representatives of different branches of government, Ukrainian and international business representatives, Chamber member companies, at the Round Table Reforms in the Agro-Industrial Complex of Ukraine: Priorities for Agrarian Industry Development to discuss challenges the agricultural sector is facing today...

UBA News

Prospects for improving economic competition protection

Patenting inventions in the field of biotechnology

Biznews

Mergers & Aquisitions

Fairfax Financial Holdings Ltd decided to purchase 9.99% shareholding in Astarta

Walmart buys startup Jet.com

Berlusconi sold football club AC Milan

Taxes

EU bound Apple to pay EUR 13 billion in taxes

Trade Facilitation

Accession to Pan-Euro-Med Convention

Ukraine signed free trade zone agreement with Canada

Antimonopoly Committee of Ukraine

AMCU approved clarification on calculation of fines

Cover Story

Going Global

Attention to compliance steps taken by Ukraine is growing around the world. The subsequent laws cross borders, ensuring their global reach. Along with facilitation of domestic laws and regulations, business is challenged to secure its reputational risks and avoid sanctions. As international investigations gain momentum, Ukraine is coming under the spotlight of foreign regulatory authorities. Ario Dehghani, counsel and recent newcomer to Redcliffe Partners, anticipates that Ukraine will go global, and very soon corporate leaders will generate big ticket tasks for the compliance practice of law...

Argument

True Detective: Another Round in the Oracle v Google Battle

Denys I. Beregovyi

Patent or copyright disputes between large vendors are sometimes just like the TV/Netflix series season 1 (the initial litigation) is either striking and fascinating or a total disaster (so you dont spend more of your time). Season 2 (the appellate stage), however, becomes decisive it will either enable producers to launch a long-lasting series or will probably cut the series to its end (glorious or boring does not really matter). So far, it seems that the Oracle v Google battle over 37 Java API packages has already become a successful series we have seen 4 seasons already with at least one more to come soon

How To

Explaining Worldwide Freezing Orders issued by English Court

Zoya H. Burbeza, Volodymyr V. Bogatyr

The Worldwide Freezing Order (WFO), formerly known as a Mareva Injunction, has become an increasingly common feature of international trade disputes. In this article we examine some frequently asked questions about this useful tool, as we regularly advise clients on WFOs and on the committal proceedings which can result from disobeying one

Crux

Legislative Update

The past summer was marked by important regulations of the National Bank of Ukraine that simplify the exchange of foreign currency cash, use electronic documents, copies of documents in electronic form when purchasing and making payments with foreign currency; and extremely important regulations of the Antimonopoly Committee of Ukraine which approved new Fining Guidelines. Ukraine continued its integration efforts and joined the Pan-Euro-Med diagonal cumulation area. The Government represented a new Draft of tax reform and submitted an initiative to provide compulsory state social health insurance. These issues became the subject for analysis by our experts...

Evgeniy Vazhynskiy
During the last few months the National Bank of Ukraine adopted a number of regulations aimed at gradual relaxation of the currency control regime. The most noteworthy changes include the decrease of foreign currency proceeds mandatory sale from 75% to 65% and lifting the ban on repatriation of dividends from Ukraine accrued for 2014 and/or 2015, the total amount of which to be repatriated shall not exceed the higher of the equivalent of USD 1,000,000 and 10% of the total accrued amount (but in any event not more than USD 5,000,000) per month

Bohdan Dmukhovskyy
With Regulation No.366 of 4 August 2016, and effective as of 12 August 2016, the National Bank of Ukraine continues its foreign currency liberalization initiatives, which are important for the revival of Ukrainian economy. The Regulation removes requirements to provide original paper documents or certified paper copies of documents (contracts, invoices etc.) by the banks clients in order to purchase and transfer foreign currency. Instead, electronic documents or electronic copies of paper documents are allowed

Anzhela Makhinova
All countries try to deepen trade liberalization by concluding free trade agreements (FTAs), usually eliminating all tariff and non-tariff trade barriers. In order to enjoy the said privileges, goods should originate in one of the countries that is a party to the FTA and be directly transported between such parties. Use of imported raw materials and components in the products may considerably influence their origin status under the FTA...

Iurii Rybak
The Cabinet of Ministers of Ukraine recently adopted Resolution on establishing the Interregional Customs Office within the system of the State Fiscal Service of Ukraine. The Governments goal in such a measure consisted of strengthening control over places of customs clearance along with reducing the level of abuse in the customs field

Yuriy Zaluskyy
The proposed Draft Act could hardly be considered comprehensive tax reform. Most of the proposals are aimed at perfecting the existing administration of taxes or rectifying deficiencies and inaccuracies. The ultimate goal of the Draft appears to be the relocation of powers from the State Fiscal Service to the Ministry of Finance. In particular, the Ministrys remit would extend to administering taxes, issuing tax rulings and maintaining databases, which are presently carried out by the State Fiscal Service

Yaroslav Romanchuk
A taxpayers electronic account has been functioning in test mode for some time, but all the alleged functionality has still not been implemented in full. Strategically, an electronic account should become a full service, by which taxpayers shall manage their payments, be able to check them at any time, as well as to receive relevant information from the tax authority in real time mode. All interactions between economic entities and fiscal authorities should take place through the electronic account...

Oleksandr Voznyuk
The updated AMCU Fining Guidelines demonstrate more than just the AMCUs approaches to the calculation of fines. The Committee is striving to build a more precise and accurate model of calculations in order to ensure that the circumstances of each individual case are duly considered and that the amounts of fines properly reflect the consequences of the infringement for the public. Such an approach is highly welcomed despite the criticism of the alleged increase of the AMCUs discretion, though time will tell whether this model is sufficiently efficient

Yevhen Filonenko
The On Banks and Banking Activity Act of Ukraine expressly enshrines the principle that banks must create a system of risk management and moreover that they are not allowed to carry out risky activities that threaten the interests of depositors or other creditors of the bank. It is for the sake of the development of the legislation that the National Bank of Ukraine adopted Resolution No.369 on 15 August 2016, which approved the Regulations on the Procedure for the Analysis and Verification by Banks of Documents (information) on Financial Transactions and their Participants...

Olena Khytrova
Compulsory health insurance is not a panacea that can work for any country. Its implementation should be preceded by tax reform and transformation of medical service providers. In Ukraine, salaries often come in envelopes, with relations between employer and employee remaining legally unregulated. These off the book payments will contribute nothing to CHI. There is a distinct possibility that the Compulsory Health Insurance Fund will suffer the same fate as the Pension Fund

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