News (#9-10 September-October 2021)

Law digest

Zelensky signed laws on development of ecologically friendly transport

President Volodymyr Zelensky has signed two laws establishing tax incentives for vehicles on biofuels or electricity, as well as for companies manufacturing them.

The issue here is amendments to the Tax and Customs Code of Ukraine, which were adopted by the Verkhovna Rada on 15 July. They are intended to increase the share of ecological transport in Ukraine by promoting accessibility for consumers and developing manufacturing.

Thus, until 1 January 2026, transactions on the import and delivery to the territory of Ukraine of vehicles with electric motors, as well as new vehicles with internal combustion engines running exclusively on compressed or liquefied methane or biogas, are temporarily exempt from value added tax.

Also, until 1 January 2031, the import of a number of goods by companies that create or upgrade their production facilities to manufacture such vehicles (excluding goods from the aggressor state and from the occupied territory of Ukraine) is exempt from VAT and import duties.

Moreover, until 31 December 2035, the profits of companies manufacturing environmentally-friendly vehicles, as well as electric motors, lithium-ion (lithium-polymer) batteries, and chargers for the said are exempt from taxation on condition that the freed funds are allocated for research in the field of electric transport, increase production volumes, etc. The laws come into force on 1 January 2022.


Parliament approved simultaneous transfer of right to land and real estate

The Verkhovna Rada adopted a law on the simultaneous transfer of rights to land along with the transfer of rights to real estate located on it (Draft Law No. 5248).

The law eliminates gaps in the legal regulation of issues related to the registration and transfer of rights to a land plot in the event of acquisition of title to real estate (residential building, construction, or structure), located on it.

Thus, the law establishes the obligation of simultaneous registration of rights to land along with the transfer of rights to a real estate unit (residential building, construction, or structure), located on it, as well as the reverse order of simultaneous transfer of rights to real estate in case of transfer of rights to the land plot where the specified real estate is located (residential house, construction, or structure).

At the same time, the new rule does not apply to transactions of purchase and sale of apartments in apartment buildings, and also does not apply to land plots in state and communal ownership.

The law also supplements the Land Code. In particular, it determines that the subject of the transaction, which provides for the transfer of title to real estate, other construction or structure or a separate share in the joint ownership of such item, unfinished construction, located on a land plot owned by the alienator, also includes the land plot in question (or a separate share in the related right of joint ownership).

At the same time, a crucial condition of such a transaction is simultaneous transfer of title to such land plot from the alienator to the purchaser of such real estate.


Parliament legalized virtual currencies in Ukraine

At its session on 8 September the Verkhovna Rada supported Draft Law No. 3637 in its second reading, making legal virtual assets and business in this area in Ukraine.

This law is a basic one and determines the legal status of virtual assets, thereby ensuring legal protection to users and market participants. Therefore, foreign and Ukrainian cryptocurrencies will operate officially, and banks will open accounts for crypto companies.

Moreover, it means that Ukrainians will be able to declare their income in virtual assets.

The Ministry of Digital Transformation will act as the market regulator, except for in specific cases regulated by the National Bank of Ukraine or the National Securities Commission. The authority will facilitate bringing Ukrainian legislation on the circulation of virtual assets into line with international standards and will protect the rights of market participants.

To carry out activities related to virtual assets turnover, service providers will be obliged to disclose the ownership structure so as to reveal ultimate beneficial owners.

Such owners must be highly reputable and have internal financial monitoring procedures in place to prevent money laundering.

The law will come into force on the date of the Law of Ukraine On Amendments to the Tax Code on the Peculiarities of Taxation of Transactions with Virtual Assets entering into force, but not earlier than this Law’s date of publication.


Industrial parks re-launch: Parliament adopted law

The Verkhovna Rada supported in the second reading the Draft Law On Industrial Parks, setting the implementation of a number of incentives to attract investment.

The Draft Law defines the facilities that can be part of an industrial park. Thus, it will be possible to engage in the processing industry, waste processing (except landfilling), scientific and technical activities, as well as information/telecommunication activities on the territory in question.

It is prohibited to manufacture excisable products (except for cars and other vehicles), be engaged in the gambling industry.

The Draft provides for at least UAH 2 billion in state budget funds for the development of industrial parks annually, from 2022 to 2025.

It also provides for the compensation of costs incurred by management companies and initiators of the park’s establishment in relation to connection and accession to grids, interest payments on loans (depending on the share of own product exports in the total proceeds of activity).

Moreover, the state budget will partially compensate for the investments made by participants in industrial parks during the first three years of the operation of such parks and is aimed at establishing related production.

The relevant Draft Laws, No. 5688 and 5689, were registered to provide tax and customs benefits for participants in industrial parks.

The document also stipulates the establishment of an authorized state agency to implement the government’s policy on the operation of industrial parks. Such an agency should be established by the government by 1 January 2025.

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