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Conducting Business in Ukraine 2016 2016 Conducting Business in Ukraine Conducting Business Conducting Business in Ukraine 2016 Conducting Business in Ukraine 2016 Baker & McKenzie Renaissance Business Center 24 Bulvarno-Kudriavska (Vorovskoho) St. Kyiv 01601, Ukraine Telephone: + 380 44 590 0101 Facsimile: + 380 44 590 0110 [email protected] www.bakermckenzie.com\ukraine All of the information included in this document is for informational purposes only, and may not reflect the most current legal developments, judgments, or settlements. This information is not offered as legal or any other advice on any particular matter. The Firm and the contributing authors expressly disclaim all liability to any person in respect of anything, and in respect of the consequences of anything, done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents of Baker & McKenzie’s Conducting Business in Ukraine brochure. No client or other reader should act or refrain from acting on the basis of any matter contained in this document without first seeking the appropriate legal or other professional advice on the particular facts and circumstances. Conducting Business in Ukraine Table of Contents Preface .................................................................................................. i 1. Ukraine - An Overview ............................................................. 1 1.1 Geography and Topography ........................................... 1 1.2 Population ....................................................................... 1 1.3 Government, Political and Legal Systems ...................... 1 1.4 Economy ......................................................................... 4 1.5 Foreign Relations ............................................................ 5 1.6 Regional Structure .......................................................... 6 2. Foreign Investment in Ukraine .................................................. 8 2.1 Laws on Foreign Investment .......................................... 8 2.2 Investment and Registration Procedure ........................ 11 2.3 Divestiture .................................................................... 13 2.4 Investment Incentives ................................................... 13 2.5 Dispute Resolution ....................................................... 13 2.6 Investment Treaties ....................................................... 14 3. Establishing a Legal Presence ................................................. 16 3.1 Companies .................................................................... 16 3.2 Joint Venture/Cooperation Agreements ....................... 25 3.3 Investment Funds/Mutual Funds .................................. 25 4. Compliance with Anti-Corruption Legislation of Ukraine ...... 29 4.1 General ......................................................................... 29 4.2 Ukrainian Anti-Corruption Legislation ........................ 29 4.3 Elements to Ensure Compliance ................................... 32 5. Taxation ................................................................................... 34 5.1 General ......................................................................... 34 5.2 Corporate Income Tax .................................................. 34 5.3 Taxation of Foreign Entities ......................................... 35 5.4 Double Taxation Treaties ............................................. 37 5.5 Taxation of Permanent Establishments ........................ 41 5.6 Value Added Tax .......................................................... 41 Baker & McKenzie i 5.7 Personal Income Tax .................................................... 43 5.8 Payroll Taxes ................................................................ 47 5.9 Land Tax ....................................................................... 48 5.10 Excise Duty .................................................................. 49 5.11 Tax Controversies ......................................................... 51 6. Currency Regulations .............................................................. 54 6.1 General ......................................................................... 54 6.2 Status of the National Currency .................................... 54 6.3 Use of Foreign Currency in Ukraine ............................ 54 6.4 Transfer of Foreign Currency from Ukraine ................ 55 6.5 Other Licensable Transactions ..................................... 56 6.6 Settlements under Export and Import Contracts ........... 57 6.7 Purchase of Foreign Currency ...................................... 57 6.8 Trade in Foreign Currency ........................................... 58 6.9 Payments for Services Rendered and Works Performed by Non-Residents ........................................ 58 6.10 Borrowing from Non-Residents ................................... 59 6.11 Temporary Restrictions on Currency Transactions ...... 59 7. Customs Regulations ............................................................... 61 7.1 Introduction .................................................................. 61 7.2 Declarant (Importer of Record) .................................... 63 7.3 Customs Broker ............................................................ 64 7.4 Registration Procedure ................................................. 64 7.5 Customs Clearance ....................................................... 64 7.6 Customs regimes........................................................... 67 7.7 Certification and Control .............................................. 78 7.8 Customs valuation rules ................................................ 79 7.9 In-Kind Contribution .................................................... 82 7.10 Customs Control ........................................................... 83 8. Property Rights ........................................................................ 87 8.1 General ......................................................................... 87 8.2 Lease of Real Estate Objects ........................................ 89 8.3 Land Ownership ........................................................... 89 8.4 Land Leases .................................................................. 92 ii Baker & McKenzie Conducting Business in Ukraine 8.5 Third Party Rights ........................................................ 95 9. Privatization ............................................................................. 96 9.1 General Background ..................................................... 96 9.2 Objects of Privatization ................................................ 97 9.3 Participants in Privatization .......................................... 98 9.4 Methods of Privatization .............................................. 99 9.5 Investment Obligations ............................................... 100 10. Competition Law ................................................................... 102 10.1 General ....................................................................... 102 10.2 Transactions and actions Subject to Prior AMC Approval ..................................................................... 102 10.3 Special Approval ........................................................ 106 10.4 Liability ...................................................................... 106 10.5 Other developments .................................................... 110 11. Dispute Resolution ................................................................ 111 11.1 Introduction ................................................................ 111 11.2 Commercial Litigation in Ukraine .............................. 112 11.3 Commercial Arbitration .............................................. 117 11.4 Enforcement of Foreign Court Judgments .................. 118 11.5 Enforcement of Foreign Arbitral Awards ................... 118 12. Financial Services .................................................................. 120 12.1 Ukrainian Financial Services Sector ........................... 120 12.2 Role of the Financial Services Commission ............... 120 12.3 Financial Institutions .................................................. 121 12.4 Types of Financial Services ........................................ 122 12.5 Licensing .................................................................... 123 12.6 Financial Institutions with Foreign Participation ....... 123 13. Capital Markets ...................................................................... 124 13.1 General ....................................................................... 124 13.2 Types and Forms of Securities ................................... 124 13.3 Securities Commission ............................................... 125 13.4 Depository System ...................................................... 125 Baker & McKenzie iii 13.5 Securities Traders ....................................................... 126 13.6 Stock Exchanges ......................................................... 127 13.7 State Securities ........................................................... 127 14. Employment ........................................................................... 129 14.1 Legislation .................................................................. 129 14.2 Employment Agreements and Employment Contracts129 14.3 Equal Job Opportunities ............................................. 132 14.4 Labor Books ..............................................................
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