Conducting Business 2017 in 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 2017 Baker McKenzie Renaissance Business Center 24 Bulvarno-Kudriavska St. Kyiv 01601, Ukraine Tel.: +380 44 590 0101 Fax: +380 44 590 0110 [email protected] www.bakermckenzie.com\ukraine Conducting Business in Ukraine Table of Contents Preface ................................................................................................... i 1. Ukraine – An Overview .......................................................... 1 1.1 Geography, Topography and Population .................... 1 1.2 Government, Political and Legal Systems .................. 1 1.3 Regional Structure ...................................................... 6 1.4 Economy ..................................................................... 7 1.5 Foreign Relations ....................................................... 9 2. Foreign Investment in Ukraine .............................................. 11 2.1 Laws on Foreign Investment .................................... 11 2.2 Making an Investment .............................................. 14 2.3 Divestiture ................................................................ 15 2.4 Investment Incentives ............................................... 16 2.5 Dispute Resolution ................................................... 16 2.6 Investment Treaties .................................................. 17 3. Establishing a Legal Presence ............................................... 18 3.1 Companies ................................................................ 18 3.2 Joint Venture/Cooperation Agreements ................... 33 3.3 Investment Funds/Mutual Funds .............................. 33 4. Compliance with Anti-Corruption Legislation of Ukraine .... 39 4.1 General ..................................................................... 39 4.2 Ukrainian Anti-Corruption Legislation .................... 39 4.3 Elements to Ensure Compliance ............................... 42 5. Taxation ................................................................................. 44 5.1 General ..................................................................... 44 5.2 Corporate Income Tax .............................................. 44 5.3 Taxation of Foreign Entities ..................................... 46 5.4 Double Taxation Treaties ......................................... 47 5.5 Taxation of Permanent Establishments .................... 51 5.6 Value Added Tax ...................................................... 52 Baker McKenzie | i 5.7 Personal Income Tax ................................................ 54 5.8 Payroll Taxes ............................................................ 58 5.9 Land Tax .................................................................. 59 5.10 Excise Duty .............................................................. 60 5.11 Tax Controversies ..................................................... 61 6. Currency Regulations ............................................................ 65 6.1 General ..................................................................... 65 6.2 Status of the National Currency ............................... 65 6.3 Use of Foreign Currency in Ukraine ........................ 65 6.4 Transfer of Foreign Currency from Ukraine ............ 66 6.5 Other Licensable Transactions ................................. 67 6.6 Settlements under Export and Import Contracts ...... 67 6.7 Purchase of Foreign Currency .................................. 68 6.8 Trade in Foreign Currency ....................................... 68 6.9 Borrowing from Non-Residents ............................... 68 6.10 Temporary Restrictions on Currency Transactions .. 69 7. Customs Regulations ............................................................. 70 7.1 Introduction .............................................................. 70 7.2 Declarant (Importer of Record) ................................ 72 7.3 Customs Broker ........................................................ 73 7.4 Registration Procedure ............................................. 73 7.5 Customs Clearance ................................................... 74 7.6 Customs regimes ...................................................... 77 7.7 Certification and Control .......................................... 86 7.8 Customs valuation rules ........................................... 88 7.9 In-Kind Contribution ................................................ 91 7.10 Customs Control ....................................................... 92 8. Property Rights ...................................................................... 96 8.1 General ..................................................................... 96 8.2 Lease of Real Estate Objects .................................... 97 8.3 Land Ownership ....................................................... 98 8.4 Land Leases ............................................................ 102 8.5 Third Party Rights .................................................. 103 Conducting Business in Ukraine 9. Privatization ......................................................................... 105 9.1 General Background ............................................... 105 9.2 Objects of Privatization .......................................... 107 9.3 Participants in Privatization .................................... 108 9.4 Methods of Privatization ........................................ 109 9.5 Investment Obligations ........................................... 110 10. Competition Law ................................................................. 112 10.1 Overview of Applicable Legislation ...................... 112 10.2 Merger Control ....................................................... 114 10.3 Anticompetitive Concerted Actions ....................... 117 10.4 Abuse of a Monopoly (Dominant) Position ........... 119 10.5 Unfair Competition and Advertisement ................. 121 10.6 Public Procurement ................................................ 122 10.7 State Aid ................................................................. 123 10.8 Liability for Infringements of Competition Law, Immunity/Leniency ................................................ 124 10.9 Competition Law Reforms: Achievements and Expectations ........................................................... 130 11. Dispute Resolution .............................................................. 133 11.1 Introduction ............................................................ 133 11.2 Commercial Litigation in Ukraine .......................... 137 11.3 Commercial Arbitration ......................................... 142 11.4 Enforcement of Foreign Court Decisions ............... 143 11.5 Enforcement of Foreign Arbitral Awards ............... 144 12. Financial Services ................................................................ 146 12.1 Ukrainian Financial Services Sector ...................... 146 12.2 Role of the Financial Services Commission ........... 147 12.3 Financial Institutions .............................................. 148 12.4 Types of Financial Services ................................... 149 12.5 Licensing ................................................................ 150 12.6 Financial Institutions with Foreign Participation ... 151 Baker McKenzie | iii 13. Capital Markets ................................................................... 152 13.1 General ................................................................... 152 13.2 Types and Forms of Securities ............................... 153 13.3 Securities Commission ........................................... 155 13.4 Depository System ................................................. 155 13.5 Securities Traders ................................................... 156 13.6 Stock Exchanges ..................................................... 157 13.7 State Securities ....................................................... 158 14. Employment ........................................................................ 159 14.1 Legislation .............................................................. 159 14.2 Employment Agreements and Employment Contracts ................................................................................ 159 14.3 Equal Job Opportunities ......................................... 162 14.4 Labor Books ........................................................... 163 14.5 Probationary Period ................................................ 163 14.6 Minimum Wage ...................................................... 164 14.7 Working Week ....................................................... 165 14.8 Holidays and Vacations